Applicability of Loan Securitization for Solving NonPerforming Loans’ Problems in Bangladeshi Commercial Bank

Abstract

Non-performing loan (NPL) is one of the most influential factors for lowering the overall performance of any bank or financial institution which immediately impacts on overall activities of a bank including liquidity, stability and profitability. The securitization is, an innovative financial product, being used in many developed and developing countries as a better solution for the NPL problem. This paper lays out a proposal of how asset securitization against the NPL of a bank can be introduced in Bangladesh. This securitization can introduce a new financial market in the economy where the writing off of bad loans just stops the NPL. The paper also shows the securitization model and the problems & the prospects of implementing NPL in Bangladesh.