Jannatul Islam: Commercial banks in Bangladesh have shown resilience during the coronavirus pandemic despite the growing trend in non-performing loans (NPL) and liquidity crisis, experts opined.
Banks struggled throughout the year to attract deposits at low interest to manage the ledger with the provisioning of bad loans. Small depositors also struggled with low deposit rates and inflation throughout the year.
Anis A Khan, former chairman of Association of Bankers Bangladesh (ABB), said the banks have shown resilience in the year of the pandemic like the people of Bangladesh.
“Banks played pro-active roles round the year as per directives from the central bank. The year is an example of extreme resilience demonstrated by banks against the provisioning of non-performing loans,” Anis A Khan told the Daily Sun.
He also appreciated the launch of digital loans from conventional banks to free the commoners from the grip of loan sharks.
Prof Shah Md Ahsan Habib of Bangladesh Institute of Bank Management (BIBM) said the banks started the year with low loan demand from the market.
“In the first quarter, the low demand for loans created concerns in the banking sector. Many thought that the money might shift to the capital market. However, the situation changed over time. The banks made good profit with a moderate circulation of loans. Bangladesh Bank kept the regulations soft for the banks due to the challenging time. However, the banks should focus on capital management through controlling the bad loans,” Dr Ahsan Habib told the Daily Sun.
Dr Ahsan also appreciated the growth of shadow banking like agent banking model for mode inclusion with a less regulated model.
Mutual Trust Bank managing director Syed Mahbubur Rahman said the banks are maintaining a balanced ledger book against the challenges of the liquidity crisis, weakness of taka against the dollar and high volume of import against the moderated exports.
“By this year-end, the remittance inflow becomes slower. We saw a few regulatory steps to control the bad loans. However, the non-performing loan remains an issue for the banking system. The Omicron variant is creating new panic around the world. The banking sector should rethink service delivery in near future,” Syed Mahbubur Rahman told the Daily Sun on Tuesday.
The acclaimed banker also suggested expanding the digital footprint of the banks to strengthen financial inclusion.
The gross NPL ratio in the banking sector moderated to 8.18 percent at the end of the fourth quarter of FY 2021 from that of 9.16 percent at the end of Q4 of FY20.
It increased marginally from that of 8.07 percent at the end of Q3FY21 partly due to the lifting of the loan moratorium facility and slackness of economic activities owing to the nationwide lockdown.
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