Non-performing loans: Policy review is required

Non-performing loans constitute a sizeable portion of our total bank loans. The scenario is worse if we consider the period of non-payment of the outstanding loans. Bad loans, as we may term a part of it, have been lying un-recovered for years together. There is doubt in relevant quarters whether it will ever be possible to recover all the defaulting loans.
There is at least one area where the Bangladesh Bank (BB) can play a crucial role in this regard. As the financial sector of the country reels under classified loans and the economy fails to produce desired outcome, the bankers apparently do  not know when they can get rid of defaulting loans in view of inordinate delays occurring in recovering the same. It is at this point that a strong intervention by the government is essential and the Bangladesh Bank should perform the role of a catalyst. The central bank should take an accommodative monetary stance, in line with advanced economies. Since the socio-political environment is not as sound and mature as in the advanced countries.
Institutions holding non-performing loans in their portfolios, not through wilful default, may be allowed to sell them to other investors in order to get rid of risky assets and clean up their balance sheets.
Sales of non-performing loans must be carefully considered since they can have numerous financial implications, including affecting the company's profit and loss, and tax situations.
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