Md Mehedi Hasan

Overall, banking sector's non-performing loans fall slightly

Excess liquidity in the banking sector of Bangladesh continues to fall despite lower credit demand ahead of the national polls and higher interest on deposits offered by banks to lure savers.

The interest rate of treasury bills in Bangladesh has crossed a recent high of 10 percent, indicating that lending rates will rise further in the days ahead, according to bankers.

Although the banking sector in Bangladesh is facing multiple challenges, including an alarming amount of bad loans, Brac Bank has been able to strengthen its financial health by keeping its values at the core of every activity.

The country’s current account balance stood in positive territory in the first quarter of the current fiscal year due to a sharp slowdown in imports.

The government's expenses on interest payments rose 22.14 percent year-on-year to Tk 92,538 crore in the last fiscal year due mainly to a higher cost of borrowing.

No bankers and directors will be able to hold any post in the Shariah supervisory committee of banks as the Bangladesh Bank changes rules to make lenders more compliant and curb irregularities. 

Premier Bank PLC is investing in building a robust digital infrastructure to make all financial services available at the fingertips of customers, said M Reazul Karim, managing director of the private commercial bank.

Bangladesh Bank yesterday issued letters of intent to Nagad Digital Bank and Kori Digital Bank, in a development that can substantially enhance people’s access to finance.

Bangladesh Bank is likely to give primary approval today for the formation of digital banks in the country.

Bangladesh is hopeful of receiving the second tranche of the IMF’s $4.7 billion loan programme in December as the authorities agreed to further monetary policy tightening, tighter fiscal policy and greater exchange rate flexibility.

A majority of banks in Bangladesh, including some Shariah-based ones, are facing difficulties to run their activities due to a liquidity crisis, according to industry people.

After banks, it is now the non-bank financial institutions (NBFI) sector that has logged in a record volume of defaulted loans, in yet another data point that informs of the alarming state of the country’s overall financial sector.

Bangladesh Bank introduced a new formula in June to determine the lending interest rate and brought about a single exchange rate recently but both are yet to be determined by the open market, the International Monetary Fund (IMF) has said.

With the high rate of non-performing loans (NPLs) being a major challenge for the banking sector, just 25 of the 61 commercial banks in Bangladesh are managing to keep their NPL rates below 5 percent.

A record 15 banks, including seven state-run lenders, faced capital shortfall in the second quarter of 2023, in yet another indication of the worrying state of the financial sector.

The defaulted loans in 10 banks, including four state-run lenders, increased at an alarming rate in fiscal 2022-23, indicating their worsening financial health.

Amid criticisms over the delay in squeezing money supply, the Bangladesh Bank yesterday made borrowing costlier as it raised the policy rate by 75 basis points to 7.25 percent to step up its fight against inflation..This is the sharpest pace of rate increase in at least a decade, said a ce

Private sector credit growth in Bangladesh has continued to dip in recent months, with banks and borrowers adopting a go-slow strategy amidst the stress on the economy and growing apprehensions of a political crisis centring the upcoming parliamentary elections.

Non-performing loans (NPLs) in Bangladesh’s banking sector hit a new record in June as withdrawal of a relaxed central bank policy, slowdown in business sales and deliberate non-payments pushed up the volume of bad loans to Tk 1,56,039 crore, central bank data showed.