Discussion on banking sector's role in revival of economy after COVID-19 held
A video conference held on Wednesday discussed issues on how to bring the economy back on track and how best the government stimulus packages can be injected to the economy through banking sector.
The conference was participated by Finance MinisterAHM Mustafa Kamal, Governor of Bangladesh Bank Fazle Kabir, Chairman of Bangladesh Association of Banks (BAB) Nazrul Islam Mazumder, and Chairman of Association of Bankers Bangladesh (ABB) Ali Reza Iftekhar, a press release said.
Chairmen of BAB and ABB praised government stimulus packages worth 98,619cr 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 (BB) initiatives and policy support to make available required liquidity to inject necessary funds to the businesses. BB 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 government announced 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 latest moves have helped the banks to manage their funds efficiently despite higher withdrawal pressure and to support credit flow under the various schemes.
Finance Minister AHM Mustafa Kamal has advised the banking sector leaders to keep Non Performing Loan (NPL) in control as the road ahead of economic recovery would be challenging. He also emphasized on putting a lid on banks operating cost and reduce cost income ratio. (Reference can be taken from the neighboring countries). And also advised cut down of unnecessary cost during this period.
Finance Minister sought input from all to develop a bond market for alternate financing of Bangladesh economy.
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.
Finance Minister AHM Mustafa Kamal 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 all the suggestions and advices given by him.
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 GovernorFazleKabir has informed the Finance Minister about all the stimulus packages and the ongoing implementation of those and assured the Finance Minister that whatever is required to keep the business community and banking sector running Bangladesh Bank will provide all the necessary policy support and guidance.
ABB Chairman Ali Reza Iftekharsaid 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 time frame from 30 June to 31 Dec 2020 regarding the down gradation of accounts (Ref BRPD circular No. 4 dated 19 March 2020). The BB Governor has 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.
