It appears defaulting loans is increasingly turning into a worrying trend.
According to recent data from the World Bank, default loans in the banking sector surged to 19.3% year-on-year in the first quarter of 2022, just short of Tk2,847 crore in reaching the country’s highest-ever defaulted loans, reaching to Tk1,13,441cr.
All of this can be attributed to the withdrawal of the relaxed loan classification policy. The Bangladesh Bank had taken several measures some time ago to try and get rid of non-performing loans, which included easing the loan rescheduling and classification rules. To say that these measures have failed to produce the expected results would be an understatement, as NPLs are clearly on the rise more than ever.
The biggest offender, unsurprisingly, are state owned banks; to whom 46.5% of all defaulted loans are attributed to.
Our SOBs have, for a long time now, been a massive source of headache for our economy, acting as nothing more than white elephants. Which is why, again, it is of very little surprise that they would be at the centre of our ever-increasing issues with defaulting loans.
Bad loans and SOBs have always gone hand in hand; and the need to dissolve these loss-making entities has never been more pertinent especially as our economy is now starting to heal from the effects of the pandemic in the last two years. SOBs have continued to put our entire nation at risk by issuing large sums of money as loans -- most of which have historically been defaulted.
These entities are clearly setting a precedence for every unscrupulous business and entrepreneur looking to fill their coffers at the expense of our economy, delinquent borrowers who are not repaying loans by using the pandemic as an excuse.
This must end.
Given that these are state-owned entities we are talking about, their unchecked defaulting at one point becomes a form of state-sanctioned chicanery. It is about time that things changed.