BB moves for database to monitor large loans

Bangladesh Bank has moved for introducing a separate database for large credits given by banks to big clients, reports UNB.
Central bank officials said the move for new system ‘Central Database for Large Credit (CDLC)’ was initiated in order to enhance financial discipline in banking sector.
Under the system, banks and FIs have been asked to report to the central bank about their loans amounting to Tk 50 crore and above.
Explaining the necessity for new data system, a Bangladesh Bank circular, issued by its Financial Stability Department (FSD) said: “Though the low quality credit portfolio is not significant yet, it may create stress on the individual bank or FI in particular and the financial system in general if left unaddressed.”
The officials said the new system will play a major role to establish a robust financial system in line with the international best practices.
They said the new system will involve all concerned banks and financial institutes (FIs) to initiate joint or individual corrective measures for managing their distressed assets.
The central bank said it has adopted a series of reform measures for supervisory and prudential framework for enhancing financial discipline.
As a result, considerable progress has been made in credit discipline and recovery initiatives. A portion of loans may, however, turn bad/loss, putting stress on financial soundness of an individual bank or financial institution (FI), thereby leading to financial system instability.
“Bangladesh Bank, in this context, has decided to introduce a new oversight framework for large exposures to identify and manage the low quality assets well ahead of time before they appear as a cause for financial distress,” it added. The CDLC will monitor the large exposures in a more structured way.

 

BB moves for database to monitor large loans

Bangladesh Bank has moved for introducing a separate database for large credits given by banks to big clients, reports UNB. Central bank officials said the move for new system Central Database for Large Credit (CDLC) was initiated in order to enhance financial discipline in banking sector. Under the system, banks and FIs have been asked to report to the central bank about their loans amounting to Tk 50 crore and above. Explaining the necessity for new data system, a Bangladesh Bank circular, issued by its Financial Stability Department (FSD) said: Though the low quality credit portfolio is not significant yet, it may create stress on the individual bank or FI in particular and the financial system in general if left unaddressed. The officials said the new system will play a major role to establish a robust financial system in line with the international best practices. They said the new system will involve all concerned banks and financial institutes (FIs) to initiate joint or individual corrective measures for managing their distressed assets. The central bank said it has adopted a series of reform measures for supervisory and prudential framework for enhancing financial discipline. As a result, considerable progress has been made in credit discipline and recovery initiatives. A portion of loans may, however, turn bad/loss, putting stress on financial soundness of an individual bank or financial institution (FI), thereby leading to financial system instability. Bangladesh Bank, in this context, has decided to introduce a new oversight framework for large exposures to identify and manage the low quality assets well ahead of time before they appear as a cause for financial distress, it added. The CDLC will monitor the large exposures in a more structured way.