Dhaka:Banking experts have called for specialized legal mechanisms, a national asset management company, and stronger supervision to tackle the banking sector's growing burden of bad loans, which is estimated at nearly Taka 6 lakh crore. This appeal was made on the second day of the 11th Annual Banking Conference held at the Bangladesh Institute of Bank Management (BIBM) in Mirpur-2, Dhaka, as per a press release.
According to Bangladesh Sangbad Sangstha, Dr. Barkat-e-Khuda, a former professor and chairman of the Department of Economics at the University of Dhaka, presented a keynote paper outlining a series of measures to address the sector's major challenges and accelerate economic growth. He proposed specialized legal mechanisms, including the Distressed Asset Management Act (DAMA) and the Insolvency and Bankruptcy Act, to handle the significant volume of non-performing loans (NPLs).
The keynote paper emphasized the need to strengthen Bangladesh Bank's supervision, conduct independent audits, and establish a national asset management company to manage legacy bad debts. It also recommended holding willful defaulters of state-owned commercial banks legally and financially accountable, including asset freezes and enforcement of single-borrower exposure limits.
Dr. Barkat-e-Khuda further advocated for operationalizing the Bank Resolution Department and the Bank Restructuring and Resolution Fund (BRRF) to conduct asset quality reviews (AQRs) and implement prompt corrective action (PCA) measures. He highlighted the importance of addressing structural weaknesses affecting the advance-deposit ratio (ADR), such as high NPLs, weak credit demand in productive sectors, and inadequate liquidity management. Comprehensive bankruptcy laws and the removal of judicial bottlenecks delaying loan recovery are also necessary, he stated.
The conference was attended by Professor Dr. Mahbub Ullah, national professor and former professor and chairman of the Department of Development Studies at the University of Dhaka, who served as the chief guest. BIBM Director General Dr. Md. Ezazul Islam, who chaired the session, noted that NPLs accounted for roughly one-third of outstanding bank loans as of June 2026 and cited governance failures, capital and provisioning shortfalls, money laundering, and productivity constraints as factors weakening the banking sector.
Dr. Islam highlighted the uneven distribution of liquidity across the banking system, with some banks experiencing severe liquidity stress while others held substantial excess liquidity. He called for credible and coordinated reforms focusing on stronger supervision, independent governance, transparent asset quality reviews, effective recovery and resolution of distressed loans, adequate capital buffers, and robust depositor protection. He also suggested that digital tools, including improved credit assessment and transaction monitoring, could support the reform process, alongside professional ethics, skilled personnel, and institutional accountability.
The two-day conference features 13 plenary sessions and presentations of 104 research papers, attracting more than 800 participants, including policymakers, bankers, researchers, academics, and students from both domestic and international backgrounds. BIBM has been organizing the Annual Banking Conference since 2012, providing a platform for experts and researchers to exchange knowledge and discuss emerging challenges and sustainability issues in banking, finance, and the economy.