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Dhaka Tribune

NPLs rise by Tk3863 crore in 3 months

It hits Tk1,16,288 crore as of September

Update : 28 Nov 2019, 09:20 AM

The non-performing loans (NPLs) of banks rose by a staggering Tk3,863.14 crore in three months till September this year, taking the amount of stress loan in the banking sector to Tk1,16,288.31crore despite huge facilities in place to regularize  default loans.

As of September, the total bad loans accounted for 11.99% of the total disbursed loans, according to the latest Bangladesh Bank (BB) data. 

At the end of June this year, the total non-performing loans in the banking system were at Tk1,12,425.17crore, or 11.69% of the total disbursed loans. 

Senior bankers and economists blamed the upward trend of NPLs on the culture of impunity, political interference in approving loans and ineptness of banks in dealing with the pressing issue.

Talking to Dhaka Tribune, former Bangladesh Bank governor Salehuddin Ahmed said: “The rescheduling policies adopted recently by the government and the central bank for banking sector went in the wrong direction. The defaulters were given leverage by these policies. Good borrowers are now feeling discouraged to pay debts.”

The central bank must be rigorous to reduce the default loans and all the facilities extended to the defaulters should be scrapped immediately, he suggested. 

Besides, he mentioned, it was the prime responsibility of the banks to look into the eligibility of a company to get loans as well as its capacity to repay. 

But in practice, while approving loans, these things were not considered actively as the bankers were sometimes involved in corruption and extended loans resorting to irregularities, Salehuddin Ahmed regretted. 

The non-performing loans of banks rose by Tk16,917.39 crore in the last one year to September this year. Total NPLs in the banking system was Tk99,370.92 crore at the end of September, 2018. 

The total outstanding loans in the banking sector stood at Tk9,69,882.22 crore as of September 2019. 

In March this year, Bangladesh Bank's former deputy governor Khondokar Ibrahim Khaled had said:  “For the last few years, money was not disbursed from the banking sector, but was looted.”

Ibrahim Khaled noted that the new loan rescheduling policy adopted by Bangladesh Bank pushed the entire banking sector to a grave danger. 

Because of this, he said, Bangladeshi banks would go down internationally and not be evaluated in international standards. 

Banks should immediately strengthen their monitoring and supervision systems to tackle the problem of defaulted loans, he suggested. 

According to the latest data, against the total non-performing loans, commercial banks keeps at Tk54,334.3 crore as provision. The banking sector faced a combined provisioning shortfall of Tk8,129.48 crore as of September this year. 

May 16 this year, the central bank issued a loan rescheduling  policy for loan defaulters. Under the rescheduling policy, loan defaulters can make a 2 per cent down payment to avail a 9 per cent interest rate and 10 years, including one year’s grace period, to pay back their loans.

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