BIBM proposes injecting money into economy for repairing losses

The Bangladesh Institute of Bank Management (BIBM) has proposed 10 action plans including injecting money into the economy to repair the losses caused by the novel coronavirus pandemic.

Unless liquidity is injected, many businesses might fail to pay back their debts to the banks, which will ultimately affect the banks negatively, it said on Saturday.

The BIBM placed the recommendations at an online workshop on "Economic, Monetary and Financial Sector Implications of Covid-19: Preparedness of Banks in Bangladesh" on that day.

BIBM Director General Md Akhtaruzzaman presided over the workshop and BIBM Director Professor Shah Md Ahsan Habib moderated the discussion.

In the keynote paper presented at the program, Ahsan said, "As a crisis response strategy, policy makers around the globe are following almost a common approach of injecting money into the economy by ensuring greater liquidity with the banks."

"However, if banks do not respond with proactive approaches to finance the economic agents, national policy goals cannot be attained," he said, adding that the banks must work on strategising financing to support the policy makers in this critical moment and minimise their risks at the same time.

The BIBM also suggested giving top priority to containing the spread of novel coronavirus and strict maintenance of health measures as per the prescription of the World Health Organization.

Apart from these, the BIBM also proposed doing preparatory work for probable infrastructural change through technology adaptation, assessment of credit portfolio and payment services, reviewing current and upcoming liquidity status, optimum utilisation of stimulus packages, maintaining transparency with the regulator, taking care of reputation risk and country risk, strategic communication for ensuring soundness and working for building trust and confidence.

At the programme, Ahsan also mentioned that tourism and leisure, aviation and maritime ventures, automotive, construction and real-estate and non-essential manufacturing sectors are the worst sufferer of the novel coronavirus outbreak.

On the other hand, medical supply and services, personal and healthcare, food processing and retail, information and communication technology and e-commerce businesses are the potential gainers in the current situation, the BIBM director mentioned.

Ahsan also mentioned that the situation may vary significantly from country to country because of many other associated factors.

Former Mutual Trust Bank managing director Anis A Khan said banks will have to rationalise their operational cost by reducing unnecessary expenses like having too many ATM booths in one place.

But, it should not cut jobs because it will be difficult to get new jobs for the sacked employees, he said.

Md Nehal Ahmed, a professor at BIBM, said "Two or three years after the Covid-19 pandemic passes, some small banks might fail to operate properly and they might need merger and acquisition."

Md Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank Ltd, emphasised on agri credit, while Mutual Trust Bank Managing Director Syed Mahbubur Rahman and Trust Bank Managing Director Faruq Mainuddin Ahmed emphasised on financing small and medium enterprises for the economy to recover.

BIBM chair professor Barkat-e-Khuda, and Standard Chartered Bank Country Chief Officer Naser Ezaz Bijoy, among others, also spoke at the workshop.