The commercial banks have waived Tk1bn in interests against 4,080 loan accounts in the first two months of current fiscal year.
Of them, the state-owned commercial banks waived Tk687m against 330 accounts and the private banks waived Tk281m against 2,370 accounts, according to Bangladesh Bank.
Bankers said the loan defaulters were making hectic efforts at the fag-end of the government’s tenure to get rid of the interest burden, intensifying the interest waiver.
“They are putting pressure particularly on the state-owned banks through using political links and influences,” a senior banker told the Dhaka Tribune, requesting anonymity.
Bangladesh Bank has no guideline on exemption of the interest on loan and it is decided on the bank-client relationship. The board of directors of the banks considers applications for the waiver as per their respective policies.
A senior executive of Bangladesh Bank said the banks have been asked to recover the default loans that increased rapidly in the recent times.
“The banks are granting interest waivers to expedite the loan recovery although it is not good for the banking sector to waive at such a higher rate,” he said.
According to the central bank data, the state-owned specialised banks waived Tk40m interest against 1,256 accounts and the foreign commercial banks waived Tk8.6m against 124 accounts during the months of July and August.
The senior executive continued: “Bangladesh Bank has signed memoranda of understanding with different state-owned banks to expedite the loan recovery.”
Besides, the International Monetary Fund is putting pressure on the authorities to ensure rapid recovery of the classified loans, he added.
The executive said the banks suffer a Tk37bn shortfall of provisions, forcing the banks to focus more on recovering default loans than making profit.
He said the boards of the banks can waive interest to recover loans if they see that the loans unlikely to return from the sales of the collateral or other related assets and even after taking all possible legal steps.
During the period 2009-2012, the banks waived a total of Tk6.81bn of interest against 217,992 loan accounts. The total classified loans of the state-own banks amount to Tk233bn.
The non-performing loans to total loans and advances increased to 10% in 2012 from 6.2% in 2011.
“Waiving interest is a sensitive issue. Giving such privilege hampers normal loan recovery. It is better to avoid a waiver of loan as far as possible,” said a senior executive of a private bank.
Bringing a borrower out of the loan burden may be logical only when the borrower is genuinely affected, he added.
