IMF asks about NPL classification, write-off policies

A visiting delegation of the International Monetary Fund (IMF) in meetings with Bangladesh Bank officials yesterday sought to know about the country's non-performing loans (NPLs) classification process, loans write-off policies, financial incentives, and digital banking.

The mission met with the deputy governors, policy advisor, executive directors and directors in different meetings at the central bank headquarters.

The IMF mission also met with Bangladesh Bank Governor Abdur Rouf Talukder as part of its mid-mission brief.

The mission also wanted to know the reason behind the banking sector's high amount of non-performing loans and ways to reduce it, a meeting source said.

The central bank recently introduced a roadmap to reduce bad loans in the banking sector as per the IMF's prescription.

Bangladesh Bank aims to reduce the bad loans to less than 8 percent of all outstanding loans by June 30, 2026. The state banks' defaulted loans will be less than 10 percent and that of private banks will be under 5 percent, as per its roadmap.

Under the roadmap, the banking regulator relaxed the loans write off policies

Under the new rules, banks will be able to write off loans that have been in the "bad and loss" category for two years by keeping 100 percent provisioning against those.

Previously, banks had to wait for three years before they could write off the loans.

After the mid-mission brief, BB Executive Director and Spokesperson Md Mezbaul Haque told reporters that the mission informed about their discussions with several BB departments in the last few days.

He said they asked to conduct a study for a better understanding of how climate change was putting stress on the financial sector.