The total value of defaulted loans rose by almost one-fifth last year.
Defaulted loans rose to Tk74,303 crore in 2017 from Tk62,172 crore in 2016-- a year-on-year rise of Tk12,131 crore or 19.5%.
As a proportion of the total outstanding loans, defaulted loans accounted for 9.31% in 2017 and 9.23% in 2016.
According to the latest report of Bangladesh Bank, as of December last year, the commercial banks disbursed Tk798,195 crore as loans. Of the amount, default loans amounted to Tk74,303 crore or 9.31%, whereas default loans stood at Tk 80,307 crore or 10.67% in September that year. That means, default loans dropped by 6,000 crore in three months.
Analysts say the loan ratio came down to single digit due to efforts to realize default loans and rescheduling of loans at the eleventh hour.
Banks publish audit reports at the end of December. To show a good position in the reports, banks take up numerous strategies including rescheduling of default loans. They also strengthen their efforts to realize loans as well.
Khandaker Ibrahim Khaled, former deputy governor of Bangladesh Bank, said: “There were huge irregularities in disbursing loans by state-owned banks between 2010 and 2015. These loans have now ended up being defaulted. However, the situation improved over the last two years as the newly-appointed managing directors are making effort to curb irregularities.”
According to sources, as of December last year, six state-owned banks distributed Tk 140,769 crore as loans. Of the amount, Tk37,326 crore or 26.52% of the total outstanding loans became defaulted. As of September that year, default loans stood at Tk38,517 crore or 29.25%.
As of December last year, private sector banks disbursed loans of Tk603,603 crore. Of the amount, defaulted loans amounted to Tk29,396 crore or 4.87% of the total outstanding loans. As of September, the amount of default loans was Tk33,973crore or 5.97%.
Foreign sector banks gave Tk30,622 crore as loans as of December, out of which defaulted loans amounted to Tk2,154 crore. The amount was Tk2,298 crore as of September.
Meanwhile, default loans given by scam-hit Farmers Bank stood at Tk723 crore or 14.10% of the total outstanding loans at the end of December. As of September, defaulted loan amounted to Tk378 crore or 7.45%.
During a regional banking conference on March 4, speakers voiced concern over the culture of default loans in Bangladesh’s banking sector that is putting the entire sector in risk.
Saying that Bangladesh has the greatest ratio of non-performing loans (NPL), the speakers called on the central bank and the government to take a zero-tolerance approach on NPLs.