Economic Reporter :
MDs and chief executives of banks want a relaxation of loan dissolution rules to bring down default loan and a full proof one hundred percent provision against bad loans.
They proposed this in a proposal to the Bangladesh Bank governor Fazle Kabir, to which the bank has responded favourably, though a final decision will be taken after further assessment.
It is assumed that default loan will fall and one hundred percent provision won’t be needed to dissolve loans. For dissolving loans up to Tk 200,000, cases won’t be lodged.
Such decisions were taken on November 7 during a meet between Association of Bankers Bangladesh and officials of Bangladesh Bank. Economists however do not see the relaxing of dissolution rules as positive. They said that if this was allowed, risks would increase in the banking sector.
Former governor of Bangladesh Bank, Dr Salehuddin Ahmed, said: “The central bank needs to be stricter in recovering default loans; to reduce default loan, good governance is essential.”
In the current system of dissolution, the banks have to wait for three years. This means that even if a loan is written off, efforts must be made for at least three years to recover it.
MDs and chief executives of banks want a relaxation of loan dissolution rules to bring down default loan and a full proof one hundred percent provision against bad loans.
They proposed this in a proposal to the Bangladesh Bank governor Fazle Kabir, to which the bank has responded favourably, though a final decision will be taken after further assessment.
It is assumed that default loan will fall and one hundred percent provision won’t be needed to dissolve loans. For dissolving loans up to Tk 200,000, cases won’t be lodged.
Such decisions were taken on November 7 during a meet between Association of Bankers Bangladesh and officials of Bangladesh Bank. Economists however do not see the relaxing of dissolution rules as positive. They said that if this was allowed, risks would increase in the banking sector.
Former governor of Bangladesh Bank, Dr Salehuddin Ahmed, said: “The central bank needs to be stricter in recovering default loans; to reduce default loan, good governance is essential.”
In the current system of dissolution, the banks have to wait for three years. This means that even if a loan is written off, efforts must be made for at least three years to recover it.
