Rabiul Islam, a practising Muslim who works at a private organisation, refrained from conventional banking services for many years as both paying and receiving interest are against his religious principles.
The internet blackout for five days has affected remittance collection through banks and mobile financial services (MFS), which may put pressure on the country’s foreign exchange reserves.
Some banks have decided not to impose any interest or fees on clients for delayed payment of loan instalments, including that against credit cards, amidst a nationwide curfew and internet blackout.
Bangladesh Bank is going to unveil the monetary policy for the first half of fiscal year 2024-25 tomorrow and is expected to retain its tight monetary stance as its foremost target is to bring down the spiralling inflation.
All over the world, strict actions are taken against loan defaulters, with many countries imposing travel bans and seeking legal recourse. In Bangladesh, however, defaulters get mega-discounts.
The central bank has signalled that it would go for more tightening of the monetary policy since inflationary pressure shows no signs of cooling.
Defaulted loans at non-bank financial institutions (NBFIs) soared 38 percent to a record Tk 23,208.7 crore at the end of 2023, raising concerns over the sector’s deteriorating health.
Four state-run banks in Bangladesh are finding it difficult to recoup loans from their top 20 defaulters, a failure that has worsened their financial health and squeezed their capacity further to lend.
The Bangladesh Bank injected $12.79 billion into banks from its reserves in the just-concluded 2023-24 fiscal year as banks combatted a severe US dollar crisis which hampered import payments.
After hovering around the $21-billion mark for the previous two fiscal years, total remittances sent home by Bangladesh’s migrant workers reached nearly $24 billion in the just concluded fiscal year of 2023-24, providing some breathing space amid the forex crunch.
There is hope that the major challenges Bangladesh is facing due to high inflation and the foreign reserve crisis will stabilise gradually in fiscal year 2024-25, but consistency in maintaining a strict policy stance will be imperative to that end.
At the beginning of fiscal year 2023-24, there was an expectation that the country’s economy would recover from the shocks of the Covid-19 pandemic and other external pressures.
Small and medium enterprises (SMEs) are considered risky clients by most formal sector lenders since their financial health is weak and they are not good at managing risks and are expensive to lend. However, BRAC Bank has a different story to tell.
Banks in Bangladesh are increasing their investments in Treasury bills and bonds to net higher profits from the rising interest rate, a development that has squeezed the availability of loans for borrowers.
Bangladesh’s foreign currency reserves are set to receive as high as $2 billion this month, which may send the total to nearly $21 billion, handing a much-needed relief to the US dollar supply.
The services have received lukewarm responses from the targeted customers because they were launched hastily and lack user-friendly features and campaigns were not run to make them popular. Besides, there is no incentive and banks are unwilling, industry insiders said.
These credit bureaus will work to determine credit standards by analysing borrower data before sharing it with banks, which will help financial institutions make informed decisions, said the central bank guidelines on the licencing, operating and regulating of credit bureaus.
However, NPLs rose 38.5 percent year-on-year to Tk 1,82,295 crore by the end of March, accounting for 11.11 percent of the total loans disbursed in the banking system, according to central bank data.
