In the wake of widespread criticism over mounting non-performing loans (NPL) in the banking system, the finance ministry is going to hold a meeting next week to review the situation, officials said.
The meeting, to be chaired by financial institutions division (FID) secretary Ashadul Islam, will assess the situation in relation to volume of classified loans and provisioning in the state-owned commercial banks (SoCBs), they added.
As of September last, the amount of default loans in the country's banking sector reached Tk 1.0 trillion, an all-time high volume, stirring up worries among experts and bankers.
In the first nine months of current calendar year, the NPL jumped by nearly 34 per cent or Tk 250.67 billion to Tk 993.70 billion from Tk 743.03 billion in December last year.
The size will be even bigger if the amount of rescheduled and written-off loans are taken into account.
During the same period, the overall shortfall in provisioning against NPLs swelled by over 20 per cent or Tk 13.60 billion.
The total amount of provisioning shortfall rose to Tk 81.27 billion in September from Tk 67.67 billion in January, according to the latest central bank data.
A senior finance ministry official told the FE on Wednesday that the FID has moved to review the NPL situation, as its rising trend has fuelled concern among many.
The issue came to the fore after a local think-tank, the Centre for Policy Dialogue (CPD), voiced concern about the continuous rise in NPL, he said.
Former governor of Bangladesh Bank Salehuddin Ahmed earlier told the FE that the next government should address the NPL issue on a top priority basis for continuation of the country's ongoing economic activities.
"The entire economy might face a negative impact if the country's banking sector was in trouble," Mr Ahmed said elaborating the possible impact of such a large volume of NPLs.
As per the central bank regulations, the banks have to keep between 0.25 per cent and 5.0 per cent provision against loans in general category, 20 per cent in substandard category, 50 per cent against doubtful loans, and 100 per cent in bad or loss category.
