Five banks that have been at the centre of criticism and discussion over the years for loan scams, now hold the top spot among banks with most default loans.
Their combined default loans amount to Tk30,439 crores. The banks are – Sonali Bank, BASIC Bank, state-owned Janata Bank, private Islami Bank, and Farmers Bank, according to a central bank report.
Other banks are adopting the rescheduling process to cut the amount of default loans, as are these five banks. Bangladesh Bank kept its office open beyond business hours for two days last year to approve rescheduling applications.
Despite all efforts, the banking sector was left with default loans worth Tk74,303 crores at the end of December 2017.
State-owned Sonali Bank has Tk13,771 crores in defaulted loans – the highest among 57 banks operating in Bangladesh, according to the central bank. The bank’s default loan rose by nearly Tk3,000 crores.
By the end of 2017, the total loan distributed by Sonali Bank stood at Tk36,131 crores. Of the amount, 38.11% has turned into defaulted loans. Tk12,136 crores of the amount is now bad debt, according to the central bank.
However, Sonali Bank Managing Director Obayed Ullah Al Masud said that although the institution had the highest amount of defaulted loans, it was doing better than before. “The bank’s current administration has emphasized realizing defaulted loans. Good results will be seen in the coming days,” he said.
The central bank said that more than Tk4,000 crores had been taken out of the Sonali Bank through the Hallmark loan scam.
Out of the Sonali Bank’s 1,211 branches, 181 are operating on losses.
Basic Bank has a total default loan of Tk7,599 crores, which is 52.73% of the total distributed amount.
According to the central bank, the bank disbursed loans worth Tk14,412 crores at the end of 2017. Of the amount, Tk7,475 crores had turned into bad debt.
During the tenure of its last managing director Abdul Hye Bachchu, about Tk4,000 crores were taken out of the bank in the guise of loans in just 11 months, through unprecedented levels of irregularities.
State-owned Janata Bank has accumulated defaulted loans of Tk5,818 crores or 14.1% of the loans it has distributed.
According to the central bank, the bank had given loans of Tk41,265 crores by the end of 2017. Of them, Tk4,980 is now bad debt.
Janata Bank disbursed Tk5,504 crore to a single client Anontex Group, which took the loan in the name of 22 sister concerns.
As per the rules, a bank can disburse 25% of its total capital to a single client. But the amount is far higher than that, as the total capital of the bank is Tk2,979 crore.
Islami Bank has the highest defaulted loans among the private banks. At the end of 2017, its defaulted loan stood at Tk2,529 crores.
During this period, the bank gave out loans worth Tk67,831 crores.
Its Chairman Arastoo Khan said that although the bank’s default loans appear higher compared to other private banks, the amount was low in terms of percentage. He said they were more alert to collecting defaulted loans.
The bank had made headlines last year over changes in its ownership. Major changes were brought to its top level on January 5 last year.
Although the bank was previously controlled by Bangladesh Jamaat–e-Islami-leaning people, its rein is currently in the hands of a business community from Chittagong.
This bank, approved on political consideration, had made headlines in 2017. Among the newly-approved nine banks, it has the highest amount of default loans.
The amount of its default loans is nearly twice the total amount of the other eight banks.
According to Bangladesh Bank, the default loans of the eight other banks stood at Tk424 crores at the end of December 2017. During the same period, Farmers Bank’s defaulted loans had swelled to Tk723 crores, which was 14% of its loans.
A year ago, the bank had default loans of Tk171 crores.
Currently, Tk339 crores of its defaulted loans have turned into bad debt.
Farmers Bank adviser Pradip Kumar Dutta blamed the bank’s “previous problems” for the rising default loans. “The problems will be resolved gradually,” he added.
Established by former home minister MK Alamgir, the bank is nearing bankruptcy due to massive irregularities and corruption. The clients are not being able to withdraw their money due to fund crunch.
All sorts of the bank’s clients have applied for withdrawing their money but the bank is returning their applications every time. Not only that, the bank has expressed inability to return the money of the government’s climate fund.
This article was first published on banglatribune.com