Economic recovery after pandemic to be challenging: Finance Minister
Finance Minister AHM Mustafa Kamal has advised the banking sector leaders to keep non-performing loan at tolerable levels as the monetary recovery after coronavirus pandemic will be challenging.
He also suggested putting a cap on banks' operating cost, cutting down unnecessary costs and reducing cost income ratio during this time period.
The finance minister sought input from all to build up a bond market for alternate financing of Bangladesh economy.
Kamal came up with the suggestions at a video conference on Tuesday with the participation of Bangladesh Bank Governor Fazle Kabir, Bangladesh Association of Banks (BAB) Chairman Nazrul Islam Mazumder, Association of Bankers Bangladesh (ABB) Chairman Ali Reza Iftekhar, according to a news release.
The policymakers discussed issues on bringing economy back on track following the pandemic and injecting government stimulus packages properly the economy through banking sector.
Chairmen of the BAB and the ABB praised government stimulus packages worth Tk 986.19 billion to overcome coronavirus economic impact.
The entire size of the package stands at 3.5 % of the country's gross domestic product.
The ABB chairman commended Bangladesh Bank initiatives and policy support to make available required liquidity to inject necessary funds to the firms.
The central bank already slashed cash reserve requirement or CRR by 150 basis points to 4.0 % from 5.50 % to facilitate the banks to implement the financial stimulus packages.
The ABB chairman also appreciated central bank's proceed to cut repo rate by 75 basis points to 5.25 % from 6.00 per cent.
Central bank's moves have helped the banks to control their funds proficiently despite higher withdrawal pressure and to support credit flow beneath the various schemes.
The ABB chairman requested for considering establishment of Credit Risk Guarantee Scheme for the banks to protect the loans and advances given beneath the recent stimulus packages.
The finance minister said the banking sector is the lifeline of economy and reassured that the federal government will do everything in its capacity to aid the banking sector to put the economy back again to pre-coronavirus situation.
The BAB Chairman assured the finance minister to implement his suggestions and advices.
The news release said the BAB and ABB chairmen will sit again soon to discover the modalities to implement the tips and suggestion discussed at the conference.
They will request all of the banks to prepare a road map to implement the ideas made and submit with their respective board.
BB Governor Fazle Kabir informed the finance minister about all of the stimulus packages and the ongoing implementation of those.
Fazle Kabir assured the finance minister of providing all necessary policy supports and guidance necessary for the business enterprise community and banking sector.
ABB Chairman Ali Reza Iftekhar said that the financial health of the banks is currently most crucial to the recovery of the economy from the impact of corona pandemic as there is absolutely no alternative source to aid and inject money to the economy.
The BAB Chairman requested the finance minister and the BB Governor to increase the timeframe from June 30 to December 31 regarding the down gradation of accounts.
The BB Governor said he will look into the matter when time comes.
At the end, both BAB and ABB chairmen thanked the prime minister, finance minister, and BB Governor because of their timely involvement and support in this difficult time.
