Stating that some banks and financial institutions are facing crisis and navigating through difficult time, experts on Thursday said, proper monitoring, policy reforms, frequent auditing and selection of good borrowers are essential for a disciplined financial market.
They also stressed on corporate governance, strong monitoring of Bangladesh Bank, implementation of Company Act, restructuring process, confidence build-up, use of ADR to resolve pending financial disputes.
Financial sector is growing rapidly accompanied by growing number of financial institutions, reforms for financial inclusion, product diversification and burgeoning volume of assets, added the experts.
The speakers came up with the observations and suggestions at a seminar organised by Dhaka Chamber of Commerce & Industry (DCCI) on "Restructuring & Liquidation of Financial Institutions and Impact on Stakeholders" at DCCI in the city.
Dr. Mashiur Rahman, adviser to the Prime Minister on Economic Affairs was the chief guest at the seminar. DCCI President Osama Taseer gave the welcome address.
Mr Taseer said institutional weakness, feeble governance, lack of diligence in loan disbursement, concentration to large borrowers and slow loan recovery process raised serious concerns about the efficiency and soundness of many financial institutions.
The DCCI chief also said high NPL impacts financial sector as well as the entire economy through slow credit recycling, pushing the liquidity shortage and impacting the creditworthiness of overall banking industry.
“Increasing deposit interest rate among all banks and NBFIs, which in turn also increases the lending rate, is impacting private sector credit flow from SMEs to large businesses”, he added.
Bangladesh Bank needs to strengthen its monitoring mechanism, early warning system to improve the financial health of weak financial institutions, standard benchmark of NPL across the financial sector and restriction of deposit collection of high NPL making concern, said Osama.
Furthermore, he said some intuitional and policy reforms need to be taken up to address the state of fragile financial institutes like framing “Financial Sector Restructuring Authority” to oversight the recovery of underperforming institutes.
Dr. Mashiur Rahman stressed on keeping confidence among the financial institutions and suggested the investors or depositors to invest or deposit their hard-earned money carefully.
Rahman recommended the financial institutions to conduct internal as well as external audit in a transparent manner on a regular basis.
Regarding stock market, Dr. Mashiur said that our capital market does not have good shares nor good companies come into share market, and for that reason the investors have to depend on poor quantity of shares to trade.
He requested large companies to float shares in the stock market and suggested to invest more in the manufacturing sector.
Moreover, Mr Rahman also urged for policy reformation, modernisation and policy simplification for a strong financial market.
Arif Khan, CEO and managing director, IDLC Finance Limited, in his keynote paper urged to establish bond market and discourage banks for long term lending.
“Banks should take deposit for one year term and should not go for long term financing”, he said.
In order to cut down non-performing loans, Khan stressed for good governance, strong monitoring by the central Bank and ensuring penalising the wrong-doers.
Sohail R K Hossain, managing partner of RSA Consulting Partners and former managing director, The City Bank Limited also presented a keynote paper.
Barrister Mustafizur Rahman, advocate, Supreme Court of Bangladesh, Minhaz Mannan Emon, director, Dhaka Stock Exchange, Dr. Md. Kabir Ahmed, general manager, Bangladesh Bank and Md. Abul Kalam, director, Bangladesh Securities and Exchange Commission spoke on the occasion as panel discussants.
Senior Vice President of DCCI Waqar Ahmad Choudhury proposed to prepare a pragmatic recovery policy to aim primarily at equity objectives, to restore deposit holders’ assets, liquidity, and solvency in financial institutions through restoring enhancing credit discipline.
In the open discussion session, former senior vice president, DCCI, MS Shekil Chowdhury, former vice president M Abu Horairah, former directors AKD Khair Md. Khan, Major (Retd.) Yead Ali Fakir, managing director, IPDC Mominul Islam, Professor Dr. Mahamood Osman Imam, managing director of Pubali Bank Securities Ltd, Mohammed Ahsan Ullah, managing director, United Finance Kaiser, Tamiz Amin, managing director, EBL Securities, Md. Sayadur Rahman, managing director, NDB Capital Limited, Kanti Kumar Saha, director, DSE Brokers Association Mohammad Ali, FCA also spoke on the occasion.
DCCI Vice President Imran Ahmed, directors Engr. Akber Hakim, Ashraf Ahmed, Enamul Haque Patwary, KMN Manjurul Hoque, Engr. Md. Al Amin, Shams Mahmud and former president RM Khan were also present on the occasion.