In any country, a safe and sound banking system is the sine qua non of a strong economy. By channelising funds from savers to borrowers, banks help keep the wheels of the economy moving, in the way boosting the confidence of businesses, investors and consumers. But for years, state-owned banks in Bangladesh have been foundering under the weight of stressed or non-performing assets -- or bad loans, in lay man's term -- all thanks to irrational lending and inadequate evaluation and monitoring of debtors. Read: SMEs, women-led enterprises need access to stimulus loans Any loan that remains overdue for over three months is termed as a stressed asset in the banking sector. And today, this huge pileup of bad loans threatens to derail the economic revival in Bangladesh by choking the credit supply channel of the economy, as against export earnings and the resilience of the private sector in fuelling growth amid Covid. In fact, the cumulative non-performing loans (NPL) of six state-owned commercial banks (SCBs) currently stand at Tk 43,836 crore against that of the combined figure of Tk 49,191 crore of 42 private commercial banks (PCBs). Read Bangladesh Bank announces 4 pc export subsidy on bicycle, cement sheet, and MS steel For years, Bangladesh Bank (BB) -- the central bank -- has been underscoring the need for state-owned banks to strengthen the recovery of loans lying unrealised by defaulters, many wilful. At the same time, banks have been advised to take necessary steps in meeting the capital deficit and creating a professional asset liability management ecosystem. Md Serajul Islam, central bank's spokesperson and executive director, told UNB that the stressed assets of the state-owned banks increased "marginally due to the higher volume of total outstanding loans". Read Bangladesh Bank tops Cyber Drill 2021 Implementation of a slew of stimulus packages has caused an increase in the outstanding loans in the country's banking system during the first half (H1) of the year, he said. The amount of outstanding loans rose by more than 3% to Tk 12,13,164 billion as of June 30, 2021, from Tk 11776.59 billion quarter on quarter, as per BB data in UNB's possession.

As Bangladesh looks forward to graduating out of the least developed country (LDC) status in 2024, it's increasingly emphasising bilateral preferential trade agreement (PTA) and free trade agreement (FTA) to boost its export earnings in the next three to six years.