• Tuesday, Jul 07, 2020
  • Last Update : 11:59 pm

10 banks hold 63% of country's non-performing loans

  • Published at 09:44 pm June 30th, 2020
Non-performing loans (NPL)

Of the 10 banks, four were state owned commercial banks, two state owned specialized banks, three private commercial banks, and one foreign commercial bank

Only 10 banks out of 60 in the country hold 63% of all non-performing loans (NPLs) in Bangladesh, says a Bangladesh Bank (BB) report.

The report, "Financial Stability Report-2019", was unveiled by the central bank on Monday.

Of the 10 banks, four were state owned commercial banks, two state owned specialized banks, three private commercial banks, and one foreign commercial bank. 

The report, however, did not mention the names of the banks. 

Among the banks, the top five held 45.8% of NPLs, it added.

The report also mentioned that the NPL concentration remained high, with  28% of the NPLs in the trade and commerce sector, though the sector received only 21.9% of the total loans.

The report also said that the high gross NPL ratio of 19.7% in the shipbuilding and ship breaking sectors remained another major concern.

According to the BB, default loans stood at Tk94,313 crore at the end of 2019.

Zahid Hussain, former lead economist of the World Bank’s Bangladesh Office, blamed lack of good governance, corruption, political interference in approving loans, and a culture of impunity for the endless and soaring defaulted loans.

“Not only in the trade, commerce, and shipbuilding sectors: willful defaulters are present in all sectors,” he told Dhaka Tribune.

Economists suggested the government should take strict action against such defaulters.

The coronavirus pandemic had a negative impact on the country’s overall economy as well as the banking sector, said the report, also warning that the crisis may intensify soon. 

However, the central bank, it reads, has taken several initiatives to reduce the crisis.

The report said that the capital to risk-weighted assets ratio (CRAR) of the banking industry stood at 11.6% at end-December 2019, which was 10.5% at the end of December 2018. However, the country’s banking sector maintained the lowest CRAR in 2019 relative to neighboring countries (India, Pakistan and Sri lanka), it said.

The banking sector’s assets reached Tk16,288.7 billion in calendar year (CY)19, registering a moderate growth of 11.8 % from that of CY18. 

Among the different banking clusters, private commercial banks and state owned specialized banks had higher asset growth compared to CY18 while the rate of growth slowed down in state owned commercial banks and foreign commercial banks, as per the report.

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