Actual figure of non-performing loans 25%: Ahsan H Mansur

Economist and researcher Dr Ahsan H Mansur has highlighted discrepancies in reported financial figures, stating that while Bangladesh Bank reports non-performing loans at 11%, the actual figure is closer to 25%.

Mansur, a former official of the IMF and executive director of the Policy Research Institute, warned that increasing liquidity to Shariah-based banks could drive inflation and devalue the taka, urging immediate intervention to stabilise the banking sector.

Speaking at the Economic Reporters’ Forum (ERF) dialogue on ‘Causes of Crisis in the Banking Sector’ held at the organisation’s auditorium in Dhaka, Mansur called for a tight contractionary monetary policy aligned with inflation targets. “The central bank needs to hike policy interest rates, halt currency printing, withdraw remittance incentives, and adopt market-based interest and exchange rates,” he asserted.

He said now ad days without realising debts, banks are showing interest of the loan as income and even paying dividend from that income. ‘And the government also getting tax! But, in reality there was no income at all. Money deposited by people is being looted,’ he said.

Questioning how long the banks sustain in such manner, Ahsan said, "The deposit will come to zero and the banks won’t be able to return the depositors’ money."

It will not be possible to solve the problem of the banking sector by hiding bad loans, irregularities, corruption and money laundering in banks, he added.

He emphasised the necessity of a strong forex reserve to maintain the confidence of donor agencies and foreign investors in Bangladesh.

Mansur called for a comprehensive cleanup initiative spearheaded by the government and involving the central bank. “Massive reforms in the financial sector require strong political commitment. Concealing data or manipulating information about defaulted loans or GDP will not aid recovery,” he warned.