Measures for cure

Curing the financial sector will not be easy enough financially or politically. It needs comprehensive programmers both short term and long term for marketing the financial sector viable and competitive. for this following measures may be considered: the government needs to undertake comprehensive measures for loan recovery. So government should amend the financial loan court act to strengthen the loan courts giving the powers to execute their decrees and staffing them adequately. Increase the number of loan courts especially in Dhaka Chittagong and Khulna to clear backlog of cases. Breakdown the problem of loan recovery into specific impediments and find solutions. Strictly enforce all laws against white collar crimes. Tighter regulations should be phased in to avoid shocks to the health of banking system. For this the government and Bangladesh bank should: tighten regulations on bank capital loan classification and provisioning and ownership. Define and enforce penalties for insider lending. Examine that Bangladesh banks autonomy legal status organizational structure which needs actions to. Strengthen Bangladesh bank’s supervisory inspection treasury and risk management functions. Introduce changes to the Bangladesh bank act to provide greater autonomy for the bank. Establish twining arrangements with central bank. In the medium term upgrade technology strengthen monetary management.  To deal with troubled private banks Bangladesh bank should develop criteria for selecting banks for restructuring. Sign restructuring contracts with the selected banks specifying the steps needed to restore viability and capital adequacy. Clarify the incentives for bank owners to comply and to operate profitably in a competitive environment. Closely supervise banks in accordance with prudential norms.