Bank owners on Wednesday requested Bangladesh Bank (BB) to reform its regulations and address the severe liquidity crisis affecting several financial institutions.
At a meeting, led by Abdul Hai Sarker, Chairman of the Bangladesh Association of Banks (BAB), members raised concerns with BB Governor Ahsan H Mansur over what they perceive as overregulation and inadequate legal frameworks for loan recovery.
The bank owners emphasised the urgent need for the central bank to overhaul existing regulations, particularly the Banking Company Act and proposed that any reform should be conducted in consultation with the BAB. "We think that the central bank must involve stakeholders like us in reforming the banking rules and regulations. This will make the changes more acceptable and effective," said Sarker.
Key issues discussed during the meeting included the severe liquidity challenges facing both banks and the broader business community, particularly due to recent political change. "Several banks are facing liquidity crisis and it's the central bank's responsibility to ensure that banks can meet their obligations to depositors," Sarker added.
The BAB members also pointed out that the lack of adequate Money Loan Courts (Artharin Adalat), hinders the resolution of loan defaults. They requestedthe central bank to collaborate with the attorney general to make these courts more functional, enabling banks to sell collateral properties more efficiently.
Additionally, the meeting highlighted the persistent issue of non-performing loans (NPLs) and the culture of writ petitions delaying legal processes. BAB members sought reforms to NPL regulations and the Governor reportedly agreed to address the problem.
The bank owners also suggested that Bangladesh Bank's Banking Regulation and Policy Department (BRPD) policies should align more closely with local cultural norms while maintaining international standards. Moreover, they sought separate rules for liquidity support, particularly for Islamic banks, and the Governor remained noncommittal on this point.
In closing, the BAB emphasised the importance of a joint approach with both the Association of Bankers Bangladesh (ABB) and BAB for future regulatory decisions. They believe such stakeholder consultations will ensure smoother and more effective implementation of reforms.
The meeting ended with optimism that the central bank will take swift action to address these critical issues and strengthen the banking sector's stability.
