IMF seeks updates on enlisting willful defaulters
The authorities legislated the bank company (amendment) act - 2023 around 10 months ago, with an instruction to prepare a list of willful defaulters.
The visiting team of the International Monetary Fund (IMF) asked about the progress of enlisting the willful defaulters and advised the banks to play an effective role in the process.
They also sought to know about the updates on the financial institutions division’s plan to amend the negotiable instrument act - 1881, the bankruptcy act - 1997, and money loan court act - 2003.
In response, the IMF delegation has been apprised that the authorities have amended the bank company act and legislated the financial company act. There are three more acts that have been awaiting amendments.
What the IMF is saying now, or would say in future on reforming the banking sector, we have been talking about those issues for a long time. But the government is not paying any heed
According to sources, the IMF delegation asked the financial institutions division about updates on the issues during a meeting at the secretariat on Thursday, with the division secretary, Sheikh Mohammad Salim Ullah, in the chair.
Chris Papageorgiou, chief of the development macroeconomics division in the IMF research department, led the visiting delegation, while the global lender’s resident representative for Bangladesh, Jayendu De, was also present.
Afjal Karim, Murshedul Kabir, and Mohammad Jahangir, managing directors (MDs) of Sonali Bank, Agrani Bank, and Rupali Bank, respectively, discussed various issues on behalf of Bangladesh in the meeting. Three directors of the central bank were also present on the occasion.
The IMF team will stay in Bangladesh until 8 May and hold some more meetings with various government offices.
Bangladesh was granted a $4.7 billion loan by the IMF on 30 January last year. Among others, the IMF placed a condition to introduce five laws, including the bank company act, during the loan approval.
Bangladesh has already received more than $1 billion in two phases since the beginning of the loan scheme
The remaining conditions include bringing down the rate of default loans at state-run banks to 10 per cent, while the threshold is 5 per cent for private banks.
Bangladesh has already received more than $1 billion in two phases since the beginning of the loan scheme.
With the third tranche – $700 million – awaiting disbursal in May, the IMF moved its 10-member delegation to Bangladesh to assess the ground scenario. They held their first meeting of the trip with the Bangladesh Bank and the finance division in Dhaka on Wednesday.
They were briefed that the issue of amending the bankruptcy act will be taken care of by the law ministry, instead of the financial institutions division. Two other acts are now in the draft phase.
In the meeting, the financial institutions division presented updates on default loans and other parameters at four state-run banks, liquidity crisis in the banking sector, risk management, recapitalisation in banks, crisis of foreign currency, and introduction of laws regarding the financial sector.
Asked about the issue, Salehuddin Ahmed, former governor of Bangladesh Bank, said, “What the IMF is saying now, or would say in future on reforming the banking sector, we have been talking about those issues for a long time. But the government is not paying any heed.”
Regarding the crisis in the banking sector, he said the crisis is so acute that the authorities are now trying to find a solution in the merger of banks. He turned sceptical about its success and underscored the need for political will.