The current volume of non-performing loan (NPL) is not a big problem for the economy as it still remained at a lower level than many other countries, Planning Minister AHM Mustafa Kamal said Thursday.
He said the Tk 65,000 crore (Tk 650 billion) of NPLs would be 7-8 per cent of the total loans in the country's banking sector as against 9-10 per cent in India.
"In many countries, the NPL is higher than that of Bangladesh," he told a press briefing on the state of Bangladesh's economy at the Planning Commission in the city.
"Any loan can be turned into NPL anytime," he said, explaining factors about how a loan turns default.
An entrepreneur sets up a factory by borrowing money from banks, he said, but the entrepreneur could scrap the plan later mindfully or unmindfully considering the context.
Then the loan can be turned into NPL and the entrepreneur could reschedule it. "So, it is not always bad," said Mr Kamal, replying to a question about the issues of present volatility at the banking sector.
He, however, termed the current banking sector situation as a big challenge and suggested Bangladesh Bank (BB) to intensify its oversight role. He said the banking system is currently crossing a bumpy road which, he thought, could be overcome through higher oversight role of the BB.
The country's financial sector is considered to be passing through a difficult time in recent years as some of the banks are suffering from crises like biggest-ever loan scams, record-highest NPLs and reserve heist from the central bank.
According to the BB data, the cumulative NPLs in Bangladesh till September 2017 stood at Tk 803.07 billion.
The Planning Minister said 'hundi' of money is not a crime in the economics rather money 'laundering' is a crime.
"Some 49 per cent of the remittance comes to Bangladesh through hundi or informal channel while the rest 51 per cent comes through legal channel. Many non-resident Bangladeshis (NRBs) send their money through their friends or relatives," he said.
"But I have suggested the central bank to channel the money through legal system by providing some incentives to the senders, which is yet to be done," he added.
About the education system, he said the present education system is not fully appropriate for developing necessary manpower to build a developed economy by 2041.
"Bangladesh's one of the biggest challenges is developing its human capital to graduate as the developed nation by 2041. But the present education curriculum is not up to the mark for facilitating the target," he said.
He pointed out three challenges -- the education system, higher oversight and reforms on the banking system and, tax and revenue system reforms - behind mobilising more domestic resources.
The Planning Minister claimed that the economic growth is very much inclusive as the World Economic Forum recently ranked the country 34th in terms of the inclusive growth nation.
"Bangladesh's economy will grow at a higher pace in the future as the world economic performance is highly prospective," he said.
He said the country has created 3.7 million jobs last year, proving that it is very much in line with the "inclusive growth" paradigm. Of the total, 13 million are employed overseas, 14 million have been added to the paid-job from the un-paid ones and the rest are newly employed.
About the negative current account balance and Balance of Payment (BoP), Mr Kamal said: "It is very usual for Bangladesh as we are at developing stage where lot of imports are taking place such as construction materials and machineries for build roads and power plants etc."
"When the mega-projects will be implemented within a couple of years, the BoP will be on the positive trajectory," he added.
The planning secretary, members and high officials of the Planning Commission were present, among others, at the briefing.