'Banks should immediately strengthen their monitoring and supervision systems to tackle default loans'
A day after the names of the loan defaulters were revealed in parliament, experts have said that disclosing the top defaulters’ names would not do, rather strict measures have to be taken against the defaulters.
Besides, the experts also emphasized on listing the other big loan defaulters, whose names, they suspect might have been dropped because of loan rescheduling, restructuring and write off.
World Bank lead economist in Dhaka office Dr Zahid Hussain said all defaulters needed to be listed. He also suggested segregating the defaulters into two categories – willful defaulters and unintentional defaulter.
He is in favour of curtailing loan defaulters’ entitlements as citizens and taking legal action against them.
Talking to Dhaka Tribune, former Bangladesh Bank deputy governor Khondokar Ibrahim Khaled advocated for taking strict measures against the defaulters and ensuring yearly disclosure of defaulters’ names.
He said the new loan reschedule policy made by Bangladesh Bank pushed the entire banking sector to a grave danger. Internationally Bangladeshi banks would go down and not be evaluated in international standards, he apprehended.
Banks should immediately strengthen their monitoring and supervision systems to tackle default loans, he recommended.
Bangladesh Institute of Bank Management (BIBM) former Director General Toufiq Ahmed Chowdhury said defaulters’ list disclosure is not the only solution. “We should be finding out who the wilful defaulters are and who unintentional defaulters are. In others countries, wilful defaulters’ list is disclosed separately.”
He said the government should take a tough position against those who do not want to pay the loan wilfully.
In May 16, Bangladesh Bank granted a huge waiver for loan defaulters to expedite debt servicing in the banking sector. The latest directive of the central bank says defaulters can regularize their bad loans now by paying only a 2% down payment, instead of 10% to 50%.
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.
On Saturday, Finance Minister AHM Mustafa Kamal revealed the names of the top 300 loan defaulters in parliament, and informed that they have defaulted loan of Tk50,942 crore at banks.
The minister also provided a list of 14,617 individuals and institutions who have outstanding loans of over Tk5 crore since 2009.
These individuals and institutions have sanction limit of Tk1,741,348 crore, outstanding loan of Tk784624 crore, classified amount Tk110,541 and defaulted loan Tk100,183 crore.