A top economist has suggested that non-compliant banks should be barred by the central bank from providing new loans until they ensure compliance. He criticized the inadequacy of Bangladesh Bank’s action plans for non-performing loans (NPLs), emphasizing the need for a stricter approach to ensure compliance with Basel 3 capital adequacy norms and reduce NPL ratios below 10 percent. He highlighted the importance of reforming the governance structure of state-owned commercial banks (SoCBs) to prevent the accumulation of future NPLs, suggesting their transformation into profit-making enterprises with professional boards and management. He urged full supervision and strict adherence to regulatory norms for banks with NPL ratios exceeding 10 percent, emphasizing the avoidance of political interference in lending decisions. He also addressed macroeconomic concerns, including rising imports, exchange rate depreciation, inflation, and fiscal challenges, attributing them to policy mistakes and inadequate corrective measures.
Source for more details:
