Ending a long continued up trend in default loans, the country’s banking sector witnessed a substantial fall in non-performing loans (NPL) by around 4% or Tk16,137 in the last quarter (October-December) from the previous quarter of 2013, thanks to a relaxed rules on loan rescheduling offered by the central bank.
The classified loan reduced to Tk40,583 crore in December as compared to Tk56,720 crore in September, according to Bangladesh Bank figures the Dhaka Tribune obtained yesterday.
The total classified loan now stood at 8.93% of the total outstanding loan of Tk454,435 crore during the last quarter which was 12.79% in the previous quarter.
The classified loan also known as non-performing loan (NPL) increased 0.88% in September and 0.01% in June quarters of 2013.
Of the state-owned banks, Sonali, Janata, Agrani and BASIC recovered the classified loans significantly during the quarter, which were burdened with NPL mostly due to the loan scams.
The classified loans of total outstanding of Sonali Bank stood at 32.11% or Tk9,629 crore in December from 42.50% or Tk12,570 crore in September, followed by Janata 10.18% or Tk2,605 crore from 18.69% or Tk4,787 crore, Agrani Bank 18.26% or Tk3,317 crore from 27.05% or Tk5,119 crore and BASIC bank stood at 11.82% or Tk1,282 crore from 18.43% or Tk1,863crore.
Bangladesh Bank had earlier relaxed the loan rescheduling rules in December, 2013 to facilitate the businessmen affected by political unrest and help the banks to reduce their NPL rates in their balance sheets.
As a result, the balance sheets of the banks reflected substantial fall of classified loans which was increasing alarmingly up to third quarter (August-September).
“The rate of classified loans reduced just because of flexible policy undertaken by the central bank,” said BB Governor Atiur Rahman. “We have to closely monitor the banks that have taken the opportunity of loan rescheduling so those loans won’t turn classified again.”
Unfriendly business climate coupled with large scale financial anomalies in the banking sector had pushed the NPL higher during last year, which appeared as a major concern to Bangladesh Bank. To tackle the situation, the central bank undertook a move to reduce the default loans by relaxing reschedule policy, a senior executive of Bangladesh Bank told the Dhaka Tribune.
The move yielded a good result in reducing the NPL although it face criticism by the financial experts as they feared the banking sector might face huge classified loans in the coming years, if they fail to collect the installments properly from the reschedule facility recipients, he said.
Considering the criticism, Bangladesh Bank also planned to form a separate committee soon to monitor the loans that got the rescheduling facility, he said.
The classified loan of state-owned banks reduced by 9% or Tk7,567 crore in December. The classified loans of these banks stood 19.76% or Tk16,606 crore of total outstanding loans in December from 28.76% or Tk24,174 crore in September, 2013.
The classified loan of private commercial banks reduced by 2.76% or Tk8,000crore. The classified loans of these banks stood at 4.54% or Tk14,315 crore of their total outstanding loans in December from 7.30% or Tk22,307 crore in September.
Foreign Banks’ classified loan dropped by 0.56% or Tk151 crore during this period.
