Non-performing loans in the country's banking sector shot up by Tk25,000 crore in 2023.
According to Bangladesh Bank data released on Monday, defaulted loans surged to Tk145,633 crore at the end of December 2023 from Tk120,656 crore at the end of December 2022 and Tk103,273 crore in the same period in 2021.
Of the total default loan, Tk126,782 crore, or 87% turned into bad loans, which the central bank feared were not recoverable.
The Bangladesh Bank has been criticized for its failure to rein in default loans and for not playing its regulatory role in addressing the massive irregularities in the sector.
The defaulted loans, however, dropped by Tk13,740 crore to Tk145,633 crore in the October-December quarter from Tk155,397 crore in the July-September quarter of 2023.
The NPLs hit a record high of Tk156,039 crore in June 2023.
The total loan disbursed was Tk1,617,688 crore at the end of December 2023, and 9% of them were classified.
At the end of December, the total amount of defaulted loans in private commercial banks had reached Tk70,981 crore.
In December, the volume of such loans in state-owned commercial banks increased to Tk65,781 crore.
The amounts in foreign commercial banks and specialized banks soared to Tk3,200 crore and Tk5,669 crore, respectively, in December.
In 2020 and 2021, the borrowers enjoyed relaxed repayment terms due to the Covid pandemic, including a one-year moratorium.
The volume of defaulted loans was high at the end of December 2020, though banks were barred from downgrading loans against the repayment of only 15% of dues.
Experts attribute the increase in defaulted loans to the relaxation of repayment terms during the Covid pandemic, alongside the country’s deteriorating economic situation.
Bankers predict that the volume of defaulted loans will increase further with the existing regulatory approach and the tendency of borrowers to avoid repayments.
