
Bangladesh Bank’s new policy aims to curb default loan
Staff Correspondent, bdnews24.com
Published: 17 Jan 2019 08:29 PM BdST Updated: 17 Jan 2019 10:03 PM BdST
Bangladesh Bank has introduced a new guideline to put a lid on rising default loans.
It will go into effect from the next fiscal year beginning on July 1.
“The new guideline will help reduce the risk of default loans in the banking sector once it is implemented," said Governor Fazle Kabir while launching the guideline at the Bangladesh Institute of Bank Management in Dhaka on Thursday.
The guideline called Internal Credit Risk Rating aims to help financial institutions manage and control credit risks they incur through lending and managing the creditworthiness of borrowers and the quality of credit transactions.
The guideline on credit risk management was released at a time when non-performing loans in the banking sector continued to rise.
The commercial banks have been disbursing the loans in line with a circular called Credit Risk Guideline Manual issued by the Bangladesh Bank in 2005.
Default loans, excluding write-offs, totalled Tk 993.7 billion as of Sept 2018, according to Bangladesh Bank data.
The amount of loan written off was Tk 350 billion during the period.
Despite the remarkable improvement in the different economic indicators during the tenure of Prime Minister Sheikh Hasina, the amount of default loans has increased four times.
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