Dhaka: Bangladesh Bank (BB) reiterated its strong commitment of clamping down on wilful defaulters by taking stern action against them to make banking sector more efficient and vibrant in credit operations.

‘While the cases of the credible borrowers with potential for better businesses will be reviewed, the central bank will not hesitate to take any stern measures against the habitual defaulters and bad borrowers with a track record of persistent delinquencies’, BB said in the new monetary policy statement (MPS).

Announced on Thursday, the half-yearly policy direction of the central bank referred to the findings of the BB’s monitoring of nonperforming loans and the regulator’s action against deliberate defaulters.

The MPS mentioned that the central bank found rise in nonperforming loans in the recent times when some of the figures of default loans were potentially alarming. BB, however, addressed those with taking corrective measures.

‘Bangladesh Bank will not be lenient in this regard’, the MPS said, referring that the central bank had already taken various steps to improve supervision so financial frauds can be minimized.

For instance, it said that the digital technology has been deployed to investigate big financial transactions and loans in order to stop the repetition of banking irregularities.

The BB in the MPS also mentioned that it took financial stability as a major concern and made routine stress testing exercises as diagnostic and supervisory tools to this effect.

‘Bangladesh Bank and all other financial sectors, capital markets, the insurance sector, regulatory authorities in Bangladesh hold regular quarterly consultations toward policy coordination upholding financial stability’, BB said.

Besides tackling the short term risks, the central bank is also playing a role of development bank, with taking various steps to fence off the country’s banking and financial sectors from longer term environmental risks and inequity driven social instability risks.

‘Bangladesh Bank has been one of the few forerunner central banks addressing these risks in its monetary and financial policies, promoting socially responsible inclusive and environmentally sustainable financing’, the MPS said.

It further said that BB’s attention towards promoting inclusive, environmentally sustainable financing is not in any way impairing its core price stabilization objective, as evident from the sustained spell of Bangladesh’s inflation moderation and macroeconomic stability.

‘Bangladesh Bank believes that these innovative approaches rather than indiscriminate monetary expansion are the launching pads needed for transition to Bangladesh’s aspired higher growth trajectory’, the MPS said.