Non-performing loans (NPLs) in the country's banking sector have crossed the Tk1 lakh crore-mark after 27 months, despite Bangladesh Bank's strongest efforts to prevent this from happening.
As of September earlier this year, the volume of NPLs stood at Tk1,01,150 crore, 8.18% of total outstanding loans, as per latest data from the Bangladesh Bank.
This figure was Tk1,945 crore higher than the June figure of Tk99,205 crore earlier this year.
Bankers and insiders said that the volume of NPLs dropped last year as the central bank offered a loan moratorium facility on installments for all clients.
However, it has been alleged that this year the facility has been provided to the clients based on bank-customer relationships, leading to the rise of NPLs.
The NPLs increased in the third quarter (July-September) of this year as most of the banks suspended the central bank’s policy support for bad clients, sources added.
Businesses enjoyed the moratorium facilities on loan installments throughout the last year hit by the Covid-19.
The ongoing moratorium facilities continue depending on the bank-customer relationship.
In September this year, the NPLs of state-run banks stood at Tk44,016.38 crore, 20.07% of their total disbursed loans.
NPLs of private banks stood at Tk50,743.14 crore, foreign banks Tk2,691.78 crore and specialized banks Tk3,699 crore, according to central bank data.
Total outstanding loans in the banking sector stood at Tk12,45,391.58 crore during the period.
Salehuddin Ahmed, former Bangladesh Bank governor and economist, said borrowers got special benefits in 2020 due to the pandemic, but even now they still have this advantage.
Bangladesh Bank has given some concessions till next December to repay the loans. As a result of this facility, a customer is no longer defaulting on the amount of loan he is supposed to repay this year, unless he pays a certain amount by next December, he also said.
"Even then, bad debts are on the rise. One of the reasons for this may be the increase in loan disbursement at a later date. However, I think banks need to be stricter in recovering NPLs. However, it is also necessary to consider the side of the affected traders, because although people have come out for work, normalcy has not yet returned," Salehuddin added.
Md Serajul Islam, spokesperson and executive director at Bangladesh Bank, said: "If you notice, the percentage of defaulted loans has decreased. But it is a good sign. In fact, every quarter adds some interest, which may have increased the overall debt a bit. Moreover, last year we saw that banks could not disburse their loans in such a manner due to low demand. Over the last few months it has become somewhat normal. As a result, the total amount of NPLs increased comparatively in the second quarter."
Bankers, however, say the actual figure is several times higher than the country's total NPL figure.
Many groups have not been able to recover their debts year after year. Again the same loan is repeatedly rescheduled and the loan is kept regular, they added.