Muhith blames \\\'flexible\\\' BB policy for rise in banks\\\' NPL

Finance Minister AMA Muhith Wednesday blamed the flexible rescheduling policy of the central bank for increase in the volume of classified loans in the country's banking sector, especially in the state-owned commercial banks.
"The classified loans have increased in the state-owned banks mainly due to the flexible rescheduling policy of the Bangladesh Bank," he told reporters at his secretariat office while emerging from a meeting with Asian Development Bank (ADB) vice-president Wencai Zhang.
The finance minister also disclosed that implementation of the new pay scale for the government employees would start from July 01 next year.
The new ADB vice-president made a courtesy call on the finance minister when the funding of various priority projects by the donor agency came up for discussion.
According to official statistics of the central bank, released this month, the volume of non-performing loans (NPL) in the country's banking system increased further in the third quarter (Q3) of 2014.
The volume of classified loans increased by 11.58 per cent to Tk 572.91 billion in the July-September period of 2014 from Tk 513.44 billion in previous quarter of the calendar year.
It marked a rapid rise as the amount of classified loans was Tk 481.72 billion even in the first quarter (January-March) of the year.
Mr. Muhith, however, noted that the state-owned banks were required to lend to government agencies, including the fund-guzzling BPC (Bangladesh Petroleum Corporation), for their big purchases and delayed repayments, leading to default on loan repayment by them.
 "Government's procedural delays in terms of repayment of loans to the banks are a major reason behind the rise in the classified loans with the state-owned banks," the finance minister said on a note of defence.
Mr Muhith also defended the rise in the classified loan from Bangladesh Krishi Bank (Agricultural Bank) as he argued that it disburses tiny loans to thousands of farmers across the country and its supervision cost is high.
Rejecting a question from the journalists whether politicos are to blame for the default culture, the minister claimed that the government had been successful in eliminating the 'culture of default'.
He said the government will not take any new initiative for the central bank to rein in the rise of the NPLs as the latter has been enjoying enough powers in regulating the banks.
The finance minister said Bangladesh now needs bigger amounts of credits form the ADB to meet fund needs for big projects.
"We get loan from the ADB ranging US$ 600- $700 a year (on an average). We now need loans from the lender between $1.5 billion and $2.0 billion a year," Mr. Muhith told the reporters.
The finance minister said Japan wants to fund different projects with finances amounting to $5.0 billion in three years.
Mr. Muhith was critical of the delay in appointment of consultants for the ADB-funded projects.
He informed that sub-regional connectivity with the Nepal, Bhutan and India has progressed following ADB-sponsored funds as it helps develop infrastructures like roads.
Replying to a question related to the National Pay Commission, the finance minister said the Commission will submit its report by December 15.
"Then, a Secretary Committee to be formed and it will be implemented from the fist day of July 2015," he said.

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