B Mirror Report: Bangladesh Bank Governor Ahsan H. Mansur has announced plans to reduce the size of large loans in order to rein in non-performing loans in the banking sector and steer corporate institutions toward the bond market.
Speaking at a seminar on the challenges and recommendations for the bond market held in Gulshan, Dhaka, on Monday, he made it clear that banks will no longer be allowed to exceed the single borrower limit for any large client. He warned that no lobbying or unjust demands would be entertained in this regard.
The governor noted that currently a bank can lend a maximum of 25 percent of its capital to a single client, of which funded loans may not exceed 15 percent. He emphasized the need to move large corporate entities away from banks and into the bond market. While globally bonds and stock markets play a leading role, Bangladesh remains overly dependent on the money market or banking sector—an imbalance that must be corrected. To bring about this shift, the government must take the lead in energizing the bond market.
He added that the money market is now stabilizing because the central bank is no longer printing and injecting new money into the system. The governor proposed that the vast market of savings certificates—worth around Tk 5–6 trillion—could easily be made tradable in a secondary market or on the stock exchange. If implemented, this could double the size of the bond market overnight. However, restoring investor confidence is essential, ensuring that institutions repay funds with returns on time, and that defaulters are treated accordingly.
At the seminar, Bangladesh Securities and Exchange Commission (BSEC) Chairman Khondaker Rashed Maqsood said corporate entities prefer bank loans because of their long-term and easy availability, which in turn increases the risk of loan defaults. Meanwhile, Finance Secretary Khairuzzaman Mazumder stated that although there are some tax-related software issues in bringing treasury bonds into the secondary market, efforts are underway to resolve them. The Ministry of Finance is also considering removing the investment ceiling on savings certificates.
Stakeholders believe that if these initiatives succeed, they will bring a fundamental transformation to the country’s financial sector. A stronger bond market would reduce banks’ exposure to large corporate loans and increase cash flow in the market. This would help stabilize the investment climate in the current fiscal year and, in the long run, deepen the capital market.
The panel discussion, moderated by Bangladesh Bank Deputy Governor Habibur Rahman, featured Finance Secretary Khairuzzaman Mazumder, ICC Bangladesh President Mahbubur Rahman, Dhaka Stock Exchange Chairman Mominul Islam, BSEC Commissioner Md. Saifuddin, and ABB Chairman and City Bank Managing Director Masrur Arefin.
