IMF for making data on banks’ distressed assets, inspection reports public
Earlier, the central bank had released data on distressed assets in the country’s banking sector up to 2022, following the IMF’s prescription
The International Monetary Fund (IMF) has recommended the complete disclosure of data regarding distressed assets – including defaulted loans – held by the country's banks.
Additionally, the multilateral lender has suggested that inspection reports on the financial health of banks, conducted by the Bangladesh Bank, should be made available to customers.
The IMF review mission made the suggestions during a meeting with officials of the Bangladesh Bank at its headquarters in Dhaka on Sunday.
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A senior official of the central bank said the increasing default loans in most banks are primarily due to loan irregularities, leading to some banks facing significant liquidity crises. The IMF is concerned that the deposits of customers in these banks are at risk.
As a result, the global lender has recommended that the central bank publish a comprehensive report on distressed assets. This would enable customers to make informed decisions regarding their banking choices based on the specific position of each bank.
Earlier, the central bank had released data on distressed assets in the country's banking sector up to 2022, following the IMF's prescription. By the end of 2022, the total amount of distressed assets in the banking sector was approximately Tk3.78 lakh crore.
The distressed asset amount exceeds two times the disclosed amount of defaulted loans by the central bank. It's noteworthy that the central bank reported defaulted loans amounting to Tk1.45 lakh crore as of December 2023.
During the meeting, the IMF team inquired with the central bank about the ongoing inspection of banks' financial health and whether inspection reports are made available to customers. Several officials of the central bank informed TBS, "We are already publishing information about distressed assets. Additionally, they suggested disclosing some other information."
On the same day, during a meeting with another department of the central bank, the IMF inquired about the process of bank mergers. Representatives of the Bangladesh Bank presented information to the delegation, indicating that the central bank had already issued guidelines regarding bank mergers. They also emphasised the need for consolidation to foster stability in the country's banking sector.
A 10-member IMF delegation arrived in Dhaka on 23 April to review the fulfilment of various conditions before releasing the third instalment of the $4.7 billion loan to Bangladesh.
