Photo: Xinhua/Stringer

 
Top managements of Bangladesh's banks have agreed to bring down their industrial lending rate to single-digit and lessen the amount of classified loans shortly.

The consensus came in a meeting of the chairmen and managing directors of both public and private sector banks with Finance Minister A H M Mustafa Kamal at his Sher-e-Bangla Nagar office in the capital on Sunday.

The finance minister, flanked by Prime Minister's Private Industry and Investment Adviser Salman Fazlur Rahman and the Bangladesh Bank (BB) Governor Fazle Kabir, expressed hope that the amount of classified loans in banking sector will come down by December 31.

Meanwhile, hours after the meeting, the central bank formed a seven-member high-powered committee, headed by its deputy governor S M Moniruzzaman, to find out ways for bringing down the industrial lending rate to single-digit shortly.

"The single-digit interest rate on such lending will come into effect from January 01, 2020," the finance minister told the reporters after the meeting.

Representatives from the stakeholders concerned, including the BB as well as the public and private sector banks, will be included in the committee.

The committee will submit its report to the BB governor within a week, and the final decision will be taken within the second week of this month, he also said.

The committee's decisions will be communicated through issuing a circular or notification.

Regarding the amount of non-performing loans (NPLs), the minister expected that it will decrease by the end of December following implementation of the BB's recent circular relating to special policy on loan rescheduling and one-time exit.

On May 16, the central bank offered a special facility to loan defaulters, allowing them to reschedule their loans for a maximum period of 10 years by paying 2.0 per cent down-payment.

"The amount of NPLs would not rise further. At the same time it cannot be cut overnight, as the court verdict on the issue came in favour of us," the minister noted.

The volume of default loans jumped by nearly 24 per cent to Tk 1,162.88 billion, as on September 30, from Tk 939.11 billion, as on December 31, 2018, despite the BB's close monitoring.

The minister also said the single-digit interest rate on lending will also help bring down the amount of NPLs.

When contacted, a senior official told the FE that two chairmen - one from public banks and another from private banks, and four managing directors (MDs) and chief executive officers (CEOs) - one from public banks and three from private banks - have been included in the new committee.

The committee will also consider ensuring profitability of the banks (after implementing single-digit lending rate), according to the BB official.

"We also want to bring down the interest rate on lending to single-digit from the existing level to facilitate the country's economic growth," Syed Mahbubur Rahman, Chairman of the Association of Bankers, Bangladesh (ABB), told the FE after the meeting.