DHAKA, Dec 1, 2019 (BSS) – A seven-member committee, likely to be headed by a deputy governor of the Bangladesh Bank, would be formed shortly to reduce the bank interest rates and the Non-Performing Loans (NPLs), said Finance Minister AHM Mustafa Kamal today.
“The Bangladesh Bank Governor will form a committee including members from the Bangladesh Bank, public and private sectors and they will sort out a way (for implementing government’s plan for reducing NPLs and interest rates),” he said.
The Finance Minister was talking to reporters after holding a meeting with the chairmen and managing directors of the scheduled banks at the NEC Conference Room in the city’s Sher-e-Bangla Nagar area.
Bangladesh Bank Governor Fazle Kabir and Senior Secretary of the Financial Institution Division Md Asahdul Islam were present at the briefing.
The Finance Minister said the committee would submit its report within seven days while the final decision about the implementation of the government’s plan to reduce NPL and interest rates is expected in the 2nd week of this December and then a gazette or circular would be issued in this regard to implement it likely from 1st of January.
Fazle Kabir said the committee is likely to be consisted of seven members including a deputy governor of the central bank alongside one or more chairmen and managing directors from the state-owned and private banks.
About the alleged ‘rising trend’ of NPLs, Kamal said the government could not play a strong role in the area which is NPL and the main reason behind this is the high interest rate.
“No other country in the world except Bangladesh has such high interest rates. But, we want to make competitive the manufacturing industry. If we want to create a competitive environment for this sector, we’ll have to enhance our locally logistical support as well as to reduce the interest rate,” he said.
Noting that the trend of NPL would automatically reduce in the country with the enhancement of competitive environment, he said all stakeholders who were present in the meeting strongly felt that the interest rate should have to be brought down to single digit.
“If the NPL reduces, the competitive advantage will increase while the foreigners will feel comfortable to do their business here,” he said adding that the private sector banks play an important role since they handle around 60 percent of the LCs in the manufacturing sector.
The Finance Minister said the government believes that the NPL would not increase when the decision would be implemented as well as the interest rate would come down.
He said it often becomes difficult for the businesses and entrepreneurs to give 14 to 15 percent interest rate and with the new decision, the loan defaulters would be able to repay their loans with an interest rate of 9 percent and it would not be on compounding rate.
He hoped that the NPLs would be cleared off or square off from the balance sheets of the banks within the next 10 years.
“Since the government has got the verdict from the higher court regarding NPL, then it is expected that the NPL will be reduced by December 31 this year,” he added.
The Finance Minister said he has not advocated writing off loans of anyone, rather has given the loan defaulters some mental and physical relief. “I didn’t commit any unjust or illegal act… I tell you this would be the turning point.”
Kamal also hoped that with the introduction of 2 percent stimulus on remittance, the inward remittance flow in the country would increase by another $4 billion to $20 billion.
Answering a question, he said that Bangladesh is being protected from everything and that is why the country would be able to maintain its GDP growth.
Replying to another question, the Finance Minister said that the government would go with its proposals for forming an asset management company to deal with the NPLs and amend some other laws. “Once those are approved in the Cabinet and get vetting, then those would be placed in parliament,” he said.