New generation banks have become the victims of default loans in only three years of their starting operation.
Five of them, out of nine, registered overdue loans worth Tk44.35 crore at the end of year 2015 – for the first time since starting of their business in 2013.
The ill-fated banks are Midland, NRB, NRB Commercial, NRB Global and Farmers Bank as revealed by Bangladesh Bank’s latest data.
The growth rate of total default loans of the banking sector reduced to 8.79% in October-December quarter of last year from 9.89% in previous quarter due to huge rescheduling of loans the central bank facilitated last year, said a senior executive of Bangladesh Bank.
The total default loans in the banking system stood at Tk51,371 crore in December last against the total outstanding loans of Tk5,84,615 crore.
Though the default loan amount of the new banks is insignificant as compared to the overall loans, the default practice of the newcomers raised a concern, said the executive.
He said: “Some banks got involved in loan irregularities that caused default loans before getting maturity in business.”
The default loan of Midland Bank was Tk14 crore as of December of which over Tk9 crore was classified as bad loans. The total loan outstanding of the bank was Tk1,373 crore.
NRB Bank recorded default loans of over Tk2 crore, including Tk11 lakh of bad debt. The outstanding loans of the bank stood at Tk1,099 crore.
The amount of default loan of NRB Commercial Bank was around Tk6 crore against the total loan outstanding of Tk2,298 crore.
NRB Global Bank reported default loans of over Tk13 crore, including bad debt of Tk36 lakh. The total loan outstanding of the bank was Tk2,073 crore.
Farmers Bank registered default loans of over Tk9 crore, including bad debt of around Tk6 crore.
A Bangladesh Bank investigation found loan anomalies of Tk400 crore in the bank and appointed an observer for close monitoring on its activities.
The new bank owned by a politically influential person sparked criticism by filing a case against the central bank after it fined Tk10 lakh for showing classified loans as assets to show inflated profits.
The total outstanding loan of the bank stood at Tk2,540 crore as of December last year.
Meanwhile, the banking sector experienced significant fall in total default loans by Tk3,337 crore in the last quarter of 2015 from the previous quarter.
The default loan rate of state-owned commercial banks came down to 21.46% in December from 21.82% in September last year while private commercial banks dropped to 4.85% from 6.09% during the same period.
The amount of total default loans of six state-run banks stood at Tk23,744 crore at the end of December, lower from Tk22,727 crore in September last year.
Private commercial banks accounted for default loans of Tk20,760 crore in December, down from Tk24,578 crore in September.
The scam hit BASIC Bank saw rise in default loan rate at 50% in the last quarter of 2015 from 44.25% in previous quarter.
The bank alone accounted for default loans of Tk6, 392 crore as of December, which was Tk4,146 crore in September last year.
The provision shortfall of state-owned banks doubled to Tk4,567 crore in December from Tk2,950 crore in September last year, according to the central bank data.