Monirul Alam of DOT
Bangladesh Bank (BB) Governor Fazle Kabir is looking forward to restoration of stability in the financial sector in the year 2019.
In his New Year wish on BB portal yesterday, the governor said he is anticipating a stable financial sector that will assist the country’s economic growth.
The country’s financial sector consists of banking, insurance, financial institutions and the capital market. A country’s economic growth broadly represents by Gross Domestic Product (GDP), which was 7.86 percent in the last financial year (FY). For the current FY on (2018-19), the government has set the growth target at 7.8 percent and optimistic of achieving more upto 8:00 percent.
In order to achieve the GDP growth target, the government has increased public expenditures for development in the budget every year. At the same time, the government is also heightening the revenue realization target year-on-year.
Meanwhile, the country’s banking sector has been rocked by widespread criticize after disclosure of several loan scams. The loan scams borne by state-owned Janata bank and private sector’s Farmers Bank leaving the banks in extreme liquidity crisis. In previous years, large loan scams detected at state-owned Basic bank, Sonali bank and some 6 private banks by the central bank inspections.
As result, the proportion of default loans stood 11.43 percent at end of September 2018 that plunge significant number of banks into liquidity crisis. Recovery of the default loans remains a far cry due to bad securitisation.
On this backdrop, the BB has asked banks for several times in 2018 to accelerate recovery of default loans. The central bank has also asked banks to be prudent in approving fresh loans.
A BB high official said the monetary policy for the January-June periods will strictly monitor banks’ recovery and fresh investments.