He made the remarks joining a videoconference on Tuesday to discuss issues on how to bring the economy back on track and how best the government stimulus packages can be injected to the economy through banking sector.
Apart from the finance minister, Bangladesh Bank Governor Fazle Kabir, Chairman of Bangladesh Association of Banks (BAB) Nazrul Islam Mazumder and Chairman of Association of Banks, Bangladesh (ABB) Ali Reza Iftekhar took part in the online discussion.
The minister emphasised putting a lid on banks’ operating cost, reducing the cost-income ratio and cutting unnecessary cost during this period.
He sought inputs from all to develop a bond market for alternate financing of the Bangladesh economy.
ABB Chairman Ali Reza Iftekhar called for considering establishment of Credit Risk Guarantee Scheme for the banks to protect the loans and advances given under the recent stimulus packages.
Mustafa Kamal said the banking sector is the lifeline to the economy and reassured that the government will do everything in its capacity to support it to put the economy back on track.
Chairmen of both BAB and ABB hailed the stimulus packages worth over 98,619 crore aimed at overcoming the impacts of coronavirus on the economy. The overall size of the package stands at 3.5 percent of the country’s gross domestic product.
The ABB chairman commended Bangladesh Bank’s initiatives and policy support to make available required liquidity to inject necessary funds to the businesses.
He also appreciated central bank’s move to cut repo rate by 75 basis points to 5.25 percent from 6.00 percent.
The central bank has already slashed cash reserve requirement by 150 basis points to 4.0 percent from 5.50 percent to facilitate the banks to implement the government-announced financial stimulus packages
Central Bank’s latest moves have helped the banks manage their funds efficiently despite higher withdrawal pressure on cash even as deposits shrink in the aftermath of coronavirus outbreak.
BAB Chairman Nazrul Islam assured the finance minister of implementing all the suggestions and advice given by him.
Chairmen of BAB and ABB will sit again soon to find out the modalities to implement the recommendations and suggestion discussed at the conference.
They will urge all the banks to prepare a roadmap to implement the suggestions and submit those to their respective boards.
BB Governor Fazle Kabir informed the finance minister about all the stimulus packages and their ongoing implementation, saying to keep the business community and banking sector running, Bangladesh Bank will provide all the necessary policy support and guidance.
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ABB Chairman Ali Reza Iftekhar said the financial health of the banks is now most crucial for the recovery of the economy as there is no alternative source to support and inject money to the economy.
The BAB chairman urged the finance minister and the BB governor to extend the timeframe from June 30 to December 31 next over the down gradation of accounts.
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In reply, the central bank chief said he will look into the matter when the time will come.