Bangladesh’s banking sector is witnessing the accumulation of bad loans at an alarming rate, as borrowers show a growing tendency to default on loans. Experts have blamed the situation on the lack of good governance in the banking sector.
Figures provided by the central bank revealed that the amount of default loans stood at Tk22,644 crore at the end of 2011. Six years later, the amount has swelled to Tk74,303 crore.
Fazle Kabir, governor of the central bank, dubbed default loans as a grave problem.
Currently, the state-owned Sonali Bank has the highest amount of default loans, followed by BASIC, and Janata Bank. Among the private banks, Islami Bank tops the list of banks with the highest default loans, according to the central bank.
There have been no defaulted loans at Shimanto Bank Ltd, which is fully owned by the Border Guard Bangladesh Welfare Trust.
Sonali Bank had accumulated Tk13,771 crores in default loans as of December last year, a Bangladesh Bank report said. The amount of default loans was Tk7,599 crore for BASIC Bank, Tk5,819 crore for Janata Bank, Tk5,116 crore for Agrani Bank and Tk4,251 crore for Rupali Bank.
Bangladesh Development Bank has a total of Tk771 crore in default loans, while the state-owned Bangladesh Krishi Bank has Tk4,263 crore and Rajshahi Unnayan Bank has Tk1,162 crore.
Among the private banks, Islami Bank has total default loans of Tk2,529 crore. Pubali Bank has the second highest at Tk1,898 crore, while United Commercial Bank has Tk1,807 crores, National Bank has Tk1,611 crores and Exim Bank has Tk1,340 crore in default loans.
Former central bank governor Salehuddin Ahmed said he believed that a lack of good governance was responsible for the situation. He blamed the weakness of the regulator for the rising number of default loans.
“The increase in default loans is not only a matter of concern for the banking sector but also for the economy,” he said.
Former Bangladesh Bank deputy governor Khondkar Ibrahim Khaled said there were widespread irregularities in disbursing loans by both the state-owned and private banks in the last six years.
“The loans given out through irregularities have turned into default loans,” he said.
The central bank report showed that private AB Bank had default loans of Tk967 crore, Al-Arafah Islami Bank Tk992 crore, Bangladesh Commerce Bank Tk434 crore, Bank Asia Tk723 crore, BRAC Bank Tk721 crore, Dhaka Bank Tk761 crore, Dutch-Bangla Bank Tk962 crore, and Eastern Bank Tk325 crore.
Apart from them, First Security Islami Bank had Tk839 crore, ICB Islami Bank Tk707 crore, IFIC Bank Tk1,048 crore, Jamuna Bank Tk525 crore, Meghna Bank Tk93 crore, Mercantile Bank Tk693 crore, Midland Bank Tk43 crore, Madhumati Bank Tk8 crore in default loans.
The amount is Tk495 crore for Mutual Trust Bank, Tk662 crore for NCC Bank, Tk55 crore for NRB Bank, Tk77 crore for NRB Commercial Bank and Tk61 crore for NRB Global Bank.
According to the central bank, One Bank has total default loans of Tk829 crore, Premiere Bank Tk561 crore, Prime Bank Tk926 crore and Shahjalal Islami Bank has default loan of Tk630 crore.
Default loans of SIBL stands at Tk909 crore. South Bangla Agriculture Bank has accumulated default loans of Tk30 crore, Southeast Bank Tk1,131 crore, Standard Bank Tk935 crore, City Bank Tk1,001 crore, Farmers Bank Tk723 crore, Trust Bank Tk578 crore, Union Bank Tk57 crore and Uttara Bank Tk695 crore.
Bangladesh Bank data show that among foreign banks, Al-Falah Bank has total default loan of Tk25 crore, Citibank NA Tk22 crore, Commercial Bank of Ceylon Tk32 crore, Habib Bank Tk42 crore, HSBC Bank Tk157 crore, National Bank of Pakistan Tk1,377 crore, Standard Chartered Bank Tk474 crore, State Bank of India Tk15 crore and Woori Bank Tk7 crore.
Until December, 2017, six state-owned banks have disbursed loans of Tk1,40,769.93 crore. Of the amount, Tk37,326 have turned into default loans which is 26.52% of the loans disbursed by these banks.
During the same period, private banks have given out loans of Tk6,03,603.24 crore. Tk29,396.19 of the amount have turned into default loan. It is 4.87% of these banks’ disbursed amount.
Two state-owned specialized banks have so far given out loans of Tk23,199.69 crore. Of them, Tk5,426.30 crore or 23.39% of these banks’ disbursed loans have become default loans.
This article was first published on banglatribune.com