Total non-performing loans increased to Tk98,164.31 crore as of June 30 this year — 8.61% of the sector’s total outstanding loans
The amount of defaulted loans has been going up again since the general repayment exemption and an embargo on downgrading loan status expired in December 2020.
As per the latest Bangladesh Bank data, the total non-performing loans increased to Tk98,164.31 crore as of June 30 this year — 8.61% of the sector’s total outstanding loans.
The amount was up Tk3,899 crore from Tk94,265 crore in March, when bad loans constituted 8.48% of the total outstanding loans.
In June last year, default loans stood at Tk96,116 crore and in December last year, NPLs stood at Tk88,734.06 crore.
Salehuddin Ahmed, a former governor of the Bangladesh Bank, told Dhaka Tribune that due to Covid-19, borrowers had received special benefits in 2020.
Though there are some facilities at the moment, the special facility in repaying the loans is not maintained by the central bank, he said.
So naturally, default loans in the banking sector have started rising again. And the real picture of the banking sector has started to resurface again, he added.
“As Covid-19 hit all the sectors, all businesses, big industries as well as small and medium entrepreneurs, have suffered in terms of sales and profitability,” he further said.
Even though people have come out for work, normalcy is yet to be restored and people are more nervous about the coronavirus in 2021 compared to 2020, he said, adding: “So, Bangladesh Bank has to keep their eyes on the situation and have to resume the benefits.”
Before the coronavirus outbreak, the Bangladesh Bank in 2019 granted a loan rescheduling policy to contain the soaring volume of defaulted loans that increased to Tk 16,288 crore at the end of June that year.
According to Bangladesh Bank sources, after the general loan moratorium for 2020 had ended, the central bank again relaxed the loan classification rules in June 2021.
Under the fresh relaxation, banks were asked not to downgrade any loans if the borrowers repay within August 31 this year only 20% of the amount remaining overdue till the end of the June quarter.
Borrowers were asked to adjust the remaining 80% of the overdue amount when the tenure of the loan instalment would expire.
The central bank earlier allowed repayment tenure extension of up to two years against the existing unclassified loans based on the bank-customer relationship.