• Monday, Jun 14, 2021
  • Last Update : 05:07 am

Default loans drop in September -- as expected

  • Published at 12:21 am December 1st, 2020
Bank default NPL loans Sept 2020

Bangladesh Bank's loan moratorium facility until the year’s end is to credit for the lower figure

Banks’ balance sheet had Tk 1,676.2 crore fewer default loans at the end of September from three months earlier thanks to the central bank’s extension of loan moratorium to help businesses to combat the economic fallout of the public health crisis.

At the end of September this year, the banking sector’s total default loans stood at Tk 94,440.5 crore, which was 8.88 per cent of the total outstanding loans, according to the data from the Bangladesh Bank (BB).

At the end of June, the sector’s total default loans stood at Tk 96,116.7 crore. 

The bad loans of banks declined in first and third quarters of the year as the central bank has barred banks not to downgrade any loan for the borrowers’ failure to pay instalments in the January-December period this year, said a high official of the BB.

However, default loans edged up in the second quarter of the year owing to a technical reason, he said on condition of anonymity as he is not authorised to speak with the media.

“Some loans have been recovered even amid the pandemic. Some loans have been written off and many bad loans have become regularised through the special rescheduling policy,” said Abdul Halim Chowdhury, managing director of Pubali Bank. 

That’s the reasons behind the declining trend of default loans, he added. 

“The real picture of bad loans would be understood in the second quarter of next year,” Chowdhury added.

At the end of last year, bad loans stood at Tk 94,331 crore, down from Tk 116,288 crore three months earlier -- which was an all-time high -- owing to regularisation of a big chunk of defaulted loans through special rescheduling policy of the central bank. 

In 2019, default loans amounting to Tk 50,434 crore were rescheduled, up 117.3 per cent from a year earlier. 

Given the regulatory forbearance of the BB, the default loan data has become meaningless as a major portion of the outstanding loans has become irregular due to non-payment, said Ahsan H Mansur, executive director of the Policy Research Institute.

The bad loans will increase a lot when the loan moratorium facility, first announced on March 24, ends, said Mansur, who is also the chairman of Brac Bank. 

The BB may extend the deadline on loan moratorium facilities further on a limited scale as businesses could regain their strength, he supposed.

Agrani though is trying to increase recovery from borrower amid the pandemic, said its MD Mohammad Shams-Ul Islam.

“The recovery drive should not stop in any situation,” he said, adding that the bank will ramp up its efforts next month ahead of the year’s end.

In the last one year, the default loans of the country’s banking sector declined by Tk 21,847.5 crore. 

Facebook 50
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail