Defaulters should be restricted from state facilities : Mamun
Abu Sazzad: Bangladesh needs to ensure the rule of law for reducing the burden of the default loan which is weakening the financial health of banks and impeding economic growth of the country.
Taking to Daily Industry yesterday, Mamun-Ur- Rashid, managing director of Standard Bank told that the loan defaulters are frequently filling writ which is hampering the recovery measures of banks.
The main challenge of the banking sector is the abnormal growth non-performing loans (NPLs), said the managing director, who is also the Secretary General of Global Economist Forum-Bangladesh. According to Bangladesh Bank Data, the NPL amount is near to Tk 1.0 lac crore as on December last.
The Artha Rin Adalat Ain (Money Loan Court Act) needs to be amended to empower the banks to recover NPL amount, he lamented.
Specific time frame is a must to settle case related with default loan, he said adding the authority concerned should offer judiciary support to banks to recover NPLs as willful defaulters often file writ petitions with the High Court and get to lift their default status.
“Steps should be taken to expedite the disposal of the cases filed over loan defaulting”, Mamun said.
More rules, laws, policies, standards and practices must be introduced and maintained to minimise NPL from the banking sector, he opined.
He has underscored the need for ensuring good governance in the banking sector with a view to revamping banking sector. Banks play a vital role in the economy by taking money from the savers and giving loan to the business firms that helps accelerate economic growth as well as financial stability, he observed. Soundness in the banking sector is the pre-condition for financial stability which is foiling for default loans.
He expressed his concern about corruption and irregularities in the banking sector, which are creating obstacles to the country’s march towards becoming a more prosperous nation.
The implementation of good governance mechanisms could reduce the risk factors and enhances the process of financial development, he pointed out.
Banks are losing their capability to extend credit support to the entrepreneurs in the prevailing circumstances keeping pace with the country’s development thrust. Banks are failing to provide adequate investment in the private sector for raising the default loan, he mentioned.
He suggested for raising social awareness against the loan defaulters. In China, loan defaulters are not permitted to get business class ticket for travelling, he mentioned adding the defaulters are not allowed to get seat in the five start hotels. “If such social facilities are restricted in Bangladesh, it would help boosting the recovery measures”, he said.
Talking on the recovery of large loans, he said, adequate policy support is needed in this end as the recovery of default industrial loan would be a big challenge for the banking sector because the lion share of the non-performing loans (NPLs) amount is holding by the big borrowers.
“Joint initiative is required to recover the NPL amount which is damaging the reputation of bank as well as hampering development process of the country”, he said.
Talking on his bank’s default loan, Mamun-Ur- Rashid said Standard Bank is more cautious to disburse loan so that the money would not become defaulted.
Banks are failing to spend more money for social development due to the increasing spree of default loans. Recently, he on behalf of Standard Bank donated Tk 2.0 crore to the Prime Minister’s relief fund as a part of the banks’ CSR program.