Gear up recovery of non-performing loans
Wednesday, 22 October 2008
Siddique Islam
The Bangladesh Bank (BB) will give a fresh directive to the non-banking financial institutions (NBFIs) to intensify drive to recover non-performing loans (NPL) for improving their financial health, officials said.
The directive will be made from a review meeting with the chief executive officers and managing directors of the NBFIs to be held at the central bank today (Wednesday) with the BB Governor Salehuddin Ahmed in the chair.
The BB's move will come against the backdrop of the rising trend of classified loan portfolios of the NBFIs in the first half of the current calendar year.
The rate of overall default loans in the non-banking financial sector climbed to 8.0 per cent in June this year from 6.0 per cent registered three months earlier, they added.
The non-performing loans (NPLs) have increased by 2.0 percentage points mainly due to poor recovery by some non-banking financial institutions (NBFIs) during the period.
The central bank earlier instructed at least seven NBFIs out of 29 to take necessary steps to reduce the amounts of classified loans immediately.
The BB has taken the move against the backdrop of a rising trend of the NPLs that are now ranging between 10 per cent and 26 per cent of the total outstanding loans of the NBFIs.
The total classified loans of all NBFIs stood at Tk 7.90 billion against their total outstanding loans of Tk 96.67 billion in June this year, according to the central bank statistics.
"We will ask the NBFIs to strengthen their recovery drive of default loans to improve their financial health," a senior official of BB told the FE, adding that the meeting would discuss different issues including the rising trend in cost of funds and the deposit situation of the non-banking sector.
Meanwhile, most of NBFIs are facing difficulties in running their business smoothly mainly due to liquidity shortfall.
During the meeting, the market operators are likely to request the central bank to help ease conditions attached to the collection of fresh funds from individuals and institutions.
The Bangladesh Bank (BB) will give a fresh directive to the non-banking financial institutions (NBFIs) to intensify drive to recover non-performing loans (NPL) for improving their financial health, officials said.
The directive will be made from a review meeting with the chief executive officers and managing directors of the NBFIs to be held at the central bank today (Wednesday) with the BB Governor Salehuddin Ahmed in the chair.
The BB's move will come against the backdrop of the rising trend of classified loan portfolios of the NBFIs in the first half of the current calendar year.
The rate of overall default loans in the non-banking financial sector climbed to 8.0 per cent in June this year from 6.0 per cent registered three months earlier, they added.
The non-performing loans (NPLs) have increased by 2.0 percentage points mainly due to poor recovery by some non-banking financial institutions (NBFIs) during the period.
The central bank earlier instructed at least seven NBFIs out of 29 to take necessary steps to reduce the amounts of classified loans immediately.
The BB has taken the move against the backdrop of a rising trend of the NPLs that are now ranging between 10 per cent and 26 per cent of the total outstanding loans of the NBFIs.
The total classified loans of all NBFIs stood at Tk 7.90 billion against their total outstanding loans of Tk 96.67 billion in June this year, according to the central bank statistics.
"We will ask the NBFIs to strengthen their recovery drive of default loans to improve their financial health," a senior official of BB told the FE, adding that the meeting would discuss different issues including the rising trend in cost of funds and the deposit situation of the non-banking sector.
Meanwhile, most of NBFIs are facing difficulties in running their business smoothly mainly due to liquidity shortfall.
During the meeting, the market operators are likely to request the central bank to help ease conditions attached to the collection of fresh funds from individuals and institutions.