‘Economic recovery after virus pandemic would be challenging’

Finance minister says


FE ONLINE REPORT | Published: April 28, 2020 23:08:46 | Updated: May 01, 2020 16:41:10


-File photo

Finance Minister AHM Mustafa Kamal has advised the banking sector leaders to keep non-performing loan (NPL) at a tolerable level as the economic recovery after COVID-19 pandemic would be challenging.

He also suggested putting a cap on banks’ operating cost, cutting down unnecessary costs and reducing cost income ratio during this period.

The finance minister sought input from all to develop a bond market for alternate financing of Bangladesh economy.

Kamal came up with the recommendations 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 press release.

The policymakers discussed issues on bringing economy back on track after the pandemic and injecting government stimulus packages properly the economy through banking sector.

Chairmen of BAB and ABB praised government stimulus packages worth Tk 986.19 billion to overcome coronavirus economic impact.

The overall size of the package stands at 3.5 per cent of the country’s gross domestic product.

ABB chairman commended Bangladesh Bank initiatives and policy support to make available required liquidity to inject necessary funds to the businesses.

The central bank already slashed cash reserve requirement or CRR by 150 basis points to 4.0 per cent from 5.50 per cent to facilitate the banks to implement the financial stimulus packages.

ABB chairman also appreciated central bank’s move to cut repo rate by 75 basis points to 5.25 per cent from 6.00 per cent.

Central bank’s moves have helped the banks to manage their funds efficiently despite higher withdrawal pressure and to support credit flow under the various schemes.

ABB chairman requested for considering establishment of Credit Risk Guarantee Scheme for the banks to protect the loans and advances given under the recent stimulus packages.

The finance minister said that banking sector is the lifeline of economy and reassured that the government will do everything in its capacity to support the banking sector to put the economy back to pre-coronavirus situation.

BAB Chairman assured the finance minister to implement his suggestions and advices.

The press release said Chairmen of BAB and ABB will sit again soon to find out the modalities to implement the recommendations and suggestion discussed at the conference.

They will request all the banks to prepare a road map to implement the suggestions made and submit to their respective board.

BB Governor Fazle Kabir informed the finance minister about all the stimulus packages and the ongoing implementation of those.

Fazle Kabir assured the finance minister of providing all necessary policy supports and guidance required for the business community and banking sector.

ABB Chairman Ali Reza Iftekhar said that the financial health of the banks is now most crucial to the recovery of the economy from the impact of corona pandemic as there is no alternative source to support and inject money to the economy.

BAB Chairman requested the finance minister and BB governor to extend 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 for their timely involvement and support during this difficult time.

Share if you like