The overall performance of the banking sector is good but the condition of the state-run banks is bad, Finance Minister AMA Muhith said yesterday.

“Their level of efficiency is very low and they do not bother about their non-performing loans.”

Muhith spoke at a meeting at his secretariat office in the capital with a 15-member team of Norfund, an investment fund of the Norwegian government for the developing countries.

The team led by Kristin Clemet discussed the present state of Bangladesh's economy and investment opportunities in the country.

Norwegian Ambassador to Bangladesh Sidsel Bleken was also present at the meeting.

After independence, default loans in the banking sector amounted to 40 percent of the outstanding loans, and it now hovers around 11 percent, Muhith said.

However, scenarios in the public and private sector are different. Public banks have a higher amount of default loans than the private ones, he added.

About the private banks, the minister said there is an allegation that the directors of these banks take loans from other banks in collaboration with each other.

“Yes, the allegations are quite true.”

Muhith said the government does not force the central bank into regulating the banks. Bangladesh Bank has been taking steps regarding these matters, he said.

Many people are concerned about the growing number of banks in the country, he said. “I am not very much concerned about it.”

He said consolidation would go on automatically in the banking sector and banks failing to survive would get merged.

Muhith also apprised the Norfund team about the country's law and order situation, investment climate and overall economy.