The non-performing loans (NPLs) of banks rose by a staggering Tk16,962 crore in three months till March this year, taking the amount of stress loan in the banking sector to Tk1,10,873.54crore.
As of March, the total bad loans accounted for 11.87% of the total disbursed loans, according to the latest Bangladesh Bank (BB) data.
At the end of December 2018, the total non-performing loans in the banking system was at Tk93,911.40 crore, or 10.30% of the total disbursed loans.
Senior bankers and economists blame the upward trend of NPLs on the culture of impunity, political interference in approving loans and ineptness of banks in dealing with the pressing issue.
At the end of March this year, of the total NPLs, defaulted loans of six state-owned commercial banks stood at Tk53,879.45crore or 32.20% of their total disbursed loans — Tk1,67,303.34 crore.
Defaulted loans of Private Commercial Banks (PCBs) stood at Tk49,949.94crore or 7.08% of their total loans in the same month. The total outstanding loans of PCBs were Tk7,05,430.97 crore until March this year, the BB data said.
Talking to Dhaka Tribune, former Bangladesh Bank Governor Salehuddin Ahmed said: “The policies adopted recently by the government and the central bank for banking sector went in the wrong direction. The defaulters were given leverage by these policies. Good borrowers are now feeling discouraged to pay debts.”
The central bank must be rigorous to reduce the default loans and all the facilities extended to the defaulters should be scrapped, he suggested.
Besides, he mentioned, it was the prime responsibility of the banks to look into the eligibility of a company to get loans as well as its capacity to repay.
But in practice, while approving loans, these things were not considered actively as the bankers were sometimes involved in corruption and extended loans resorting to irregularities, Salehuddin Ahmed regretted.
Defaulted loans of foreign banks stood at Tk2,256.51crore or 6.20% of their total loans, with their total outstanding loans reaching Tk36,391.10crore in March.
NPLs of two specialized banks — Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank — stood at Tk4,787.64 crore or 19.46% of their total loans in March. Their total outstanding loans was Tk24,601.73 crore.
Bangladesh Bank's former deputy governor Khondokar Ibrahim Khaled said: “For the last few years, money was not disbursed from the banking sector, but was looted.”
Ibrahim Khaled noted that the new loan rescheduling policy adopted by Bangladesh Bank pushed the entire banking sector to a grave danger.
Because of this, he said, Bangladeshi banks would go down internationally and not be evaluated in international standards.
Banks should immediately strengthen their monitoring and supervision systems to tackle the problem of defaulted loans, he suggested.
Bangladesh Bank Executive Director and spokesman Sirajul Islam told Dhaka Tribune that the central bank was always in a strict position as regards reducing defaulting loans.
He added that banks must keep provisions and continue to put emphasis on their profit-making abilities.
The non-performing loans of banks rose by Tk22,284.17crore in the last one year to March this year. Total NPLs in the banking system was at Tk88,589.37 crore at the end of March, 2018.
The total outstanding loans in the banking sector stood at Tk9,33,727.14crore as of March 2019.