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Sunday, September 23, 2018

SOCBs performance to come under IMF's intensive scrutiny

Kazi Zahidul Hasan :
The overall performance of public commercial banks would come under the intensive scrutiny by an International Monetary Fund (IMF) delegation, which is scheduled to visit Dhaka next week.
Their visit is taking place at a time when public banks are running with huge capital shortfall and soaring non-performing loans as a result of imprudent lending practices.  
The IMF staff mission, led by Daisaku Kihara, will visit Dhaka from September 30 to October 4 to hold discussions with Bangladesh authorities.
During the visit, the IMF team will hold meetings with Finance Minister and high government officials involved in the country's economic policy making.
Officials said that at the level of preliminary phase of discussions, senior officials of the finance ministry will lead the Bangladesh delegation  in the talks and to the conclusion of consultations; Finance Minister will head the talks, mainly focused on overall performance of state-owned commercial banks (SOCBs).
Apart from this, both the parties will also hold discussions on policy measures to preserve macroeconomic stability and review overall economic performance of the country.
"Our discussion will largely focus on overall performance of the public commercial banks as per the proposed taking points sent by the IMF," a senior Finance Ministry official told The New Nation yesterday, on condition of anonymity.
He said, the IMF team has been sought to assess SOCBs overall performance, including non-performing loans (NPLs), profitability, capital adequacy, liquidity and funding in the fiscal year (FY) 2017-18 and FY 2018-19, and update report card on their compliance in line with memorandum of understandings (MoUs) signed with the government agencies.
"The team will also review measures to improve SOCBs balance sheet, recapitalization plan for FY 19 and loan recovery, " he added.
During the first half of the current calendar year, the total amount of NPLs with six state-owned commercial banks rose to Tk 42,852 crore from Tk 37,326 crore on December 31 last. It was Tk 43,685 crore in the first quarter (Q1) of 2018, shows a latest data of Bangladesh Bank (BB).
The data also shows that the total amount of NPLs in banking sector jumped by 20.24 per cent to Tk 89,340 crore as on June 30, 2018 from Tk 74,303 crore as of December 31 last.
The amount of NPLs was Tk 74,148 crore a year ago.
Earlier, IMF had expressed serious concern over soaring NPLs in public banks urging the government to reform the existing banking laws to curb defaults on loan repayments.
It also suggested BB to play an even stronger role and reinforce measures to bring down NPLs and ensure good governance in the country's banking sector.
In 2011, the IMF provided $978 million to Bangladesh under its extended credit facility (ECF) programme on several conditions.