Despite the central bank's instruction to disclose the information of default loans, the country's banks are concealing the actual scenario to show a better financial condition. Along with the state-run banks, the other commercial banks are also hiding the information. This apart, some banks showed profits in spite of having less reserve than the necessary amount. The transparency and accountability of the banks' top officials have become questionable due to the situation.
Agrani Bank Limited's Chairman Dr Zaid Bakht told the Bangla Tribune that some banks are being tricky in a few cases of default loans, which cannot be denied.
“If anybody deliberately conceals the information of default loans, it will be considered cunningness. But, default loans resulted from rescheduling turn into regular loans. It will not be right to term this kind of tendency of inconsistency cunningness,” he said.
According Bangladesh Bank's (BB) latest report, the default loans in last three months amounted to Tk11, 237 crore. After December, the figure stood at Tk62,172 crore. The default loan volume jumped to Tk73,409 crore in March. Six state-owned banks defaulted in repaying the maximum Tk35, 176 crore loan. The amount was Tk31, 025 crore in December.
Four state-run banks hid the real information about the Tk4, 071 crore loan default at the fourth quarter in December. Janata Bank Limited concealed the information about Tk1, 771 crore defaulted loan while Agrani Bank Tk 927 crore, Rupali Bank Tk 691 crore and Sonali Bank Tk 682 crore.
As per the policy on defaulted loans, a certain amount of loan is considered defaulted if it is not repaid within a fixed time. But, the defaulted loans that get the chance of rescheduling upon special facility from the central bank can not be termed defaulted any longer.
Recently, some commercial banks had their defaulted loans turned into regular ones through rescheduling. But, BB's inquiry found that the banks will not be repaid the loans. Mentionable, several years ago, many businessmen had had their same loans rescheduled repeatedly taking advantage of political unrest.
The loan classification policy says any loan that remains outstanding for less than three to six months is categorised as substandard. The debts that remains outstanding for six to nine months lies within the doubtful category. When the duration of an outstanding debt exceeds nine months it termed bad or loss.
Meanwhile, the central bank wrote to four state-run banks asking them not to be tricky about defaulted loans. Earlier, BB sent a letter to Janata Bank Limited for being cunning about the defaulted loans of a candidate in by-election of the national parliament.
BB spokesperson and Executive Director Shubhankar Saha said: “It is not a good thing to conceal the information about defaulted loans. But, we can not term all the cases cunningness. Because, what the central bank is calling a defaulted loan is being termed as regular loan by a commercial bank corresponding with a standard index.”
He also said: “When a bank calls a loan regular, which is not repaid for years, it is then considered cunningness. BB found some inconsistencies scrutinising the report of defaulted loans of four state-run banks in December. The central bank instructed the banks not to conceal the formation on loan default.”
Sources said all banks reduce defaulted loans just to show a healthy financial condition including a rise in profits at the end of a year. In that case, the banks reschedule their loans. On the other hand, many other banks conceal the amount of defaulted loans showing a reduced amount.
BB told the Agrani Bank authorities for being tricky that as per the policy there was a rule to initially categorise every loan based on materialistic and standard parameters. But, Agrani Bank prepared a financial statement defying the rule. Hence, BB thinks that the actual defaulters were not mentioned in a loan description.
Agrani Bank concealed information about a Tk927 crore loan. The bank in a statement showed Tk5,877 crore out of Tk23,100 crore as defaulted loan. But, BB's inquiry found another Tk927 crore of defaulted loan.
The bank's Managing Director Shams-ul-Islam said: “BB asked us to enlist the loans as defaulted, which we did not categorise so in terms of their standard. Later, we placed the loans complying with the central bank's instruction.”
Janata Bank in its statement submitted to BB at the end of December showed Tk4,165 crore out of Tk36,355 crore as defaul loan. But, inspecting different branches of the bank, BB found another loan default of Tk771 crore. Rupali Bank showed Tk2,794 crore as defaulted loan, but the BB's findings say the amount is Tk3,485 crore. According to Sonali Bank, its defaulted loans are Tk10,229 crore. But, BB found Tk682 more in the state-owned banks' defaulted loans.
Besides, despite having less reserve in terms of the standard of defaulted loans, many banks showed increased profits taking special advantage from BB. However, some other banks showed less losses.