FBCCI demands strict stance on loan defaults
The monetary policy for the second half of the fiscal year lacks a proper guideline on controlling the rising trend of loan defaults, the Federation of Bangladesh Chambers of Commerce and Industry said yesterday.
Banks' default loans stood at Tk 63,300 crore at the end of June last year and currently the amount is even bigger, said FBCCI President Abdul Matlub Ahmad citing a central bank report.
“The central bank should not remain concerned about the defaults only. It must be more bold in controlling the rising trend of non-performing loan ratio,” he said at a press briefing at the federation's headquarters in Motijheel.
It is necessary to take immediate steps, and there should have been a proper guideline on NPLs in the monetary policy, he said.
In September last year, default loans accounted for 10.34 percent of the total outstanding loans, up from 10.06 percent in June that year.
But the central bank, while announcing the monetary policy on Sunday, said its supervisory vigilance on lending efficiency and risk management will continue to be strengthened, with particular emphasis on transparent, accountable corporate governance and substantial reduction in loan defaults.
Referring to India's currency demonetisation, the chief of the country's apex trade body said the BB should also have a guideline in its monetary policy on how to bring the untaxed or undisclosed money to the main economy.
Ahmad also said credit with single-digit interest rate should be made available to all small- and medium-sized enterprises, which can bolster economic growth.
Big businesses are now getting loans at single-digit rate -- at lower than 9 percent rate. But the rate is still 13-14 percent for SMEs, and in some case 28 percent.
Commenting on the private sector credit growth, he said it would have been conducive to investment if the credit growth can be increased to 17 percent from 16.5 percent.
“If Bangladesh is to attain double-digit economic growth, it is also crucial to increase its investment to GDP ratio to 40 percent,” he said, adding that employment generation would have to be raised through increasing investment both in public and private sectors.
The FBCCI also expressed its concern about the anti-dumping duty imposed by the Indian government on the export of Bangladeshi jute to the neighbouring market.
India on January 5 slapped the antidumping duty on imports of jute and jute goods from Bangladesh and Nepal to “protect the domestic industry”. For Bangladesh, the duty ranges between $19 and $351 per tonne.
“Exports of jute and jute goods to India will be seriously affected,” Ahmad said, adding that the products account for 29.6 percent of the total exports to India. “We think it can be solved through bilateral discussions.”
Replying to queries on the new VAT law, he said it will be difficult for them to pay the VAT at the 15 percent flat rate. “We have proposed a 7 percent rate instead of 15 percent.”
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