Banks’ default loans in the industrial sector soared 39.50% to Tk43,620.45 crore as of September 2018, as industrialists continue to dodge the Bangladesh Bank (BB) for undue favour.
Most of the defaulters, according to BB sources, got privileges in restructuring their sour loans, but ended in defaulting again.
The amount of default loans was up from Tk31,269.68 crore during the same period of previous fiscal year, according to the latest BB data.
Bankers said the maximum amount of bank loans disbursed to the industrial sector, got a restructured facility, but failed to repay the loans.
Talking to the Dhaka Tribune, Zahid Hussain, lead economist of the World Bank’s Bangladesh Office, blamed the lack of good governance, corruption, political interference in approving loans, and a culture of impunity for the endless journey of NPLs (non-performing loans) for rising industrial loans.
He also said: “Wilful defaulters become defaulters in every sector. A large amount of bank loans is sanctioned to the industrial sector, thus the amount of default loans is high in this sector.”
“In the last decade, the country did not encounter any disaster that could have prevented businessmen from repaying their loans. The economic growth rate has increased and there has been macroeconomic stability in the country” he added.
According to central bank data on industrial default loans, the state-owned commercial banks accounted for 44.91%, private commercial banks 42.46%, foreign banks 1.67%, non-banking financial institutions 8.76% and specialized banks had 2.20%, at the end of September 2018.
During the July-September period of the current 2018-19 fiscal year, the total amount of industrial loan disbursement was Tk94,419.65 crore.
Of that, disbursement of term industrial loans was Tk19,111.22 crore and current capital loan amounted at Tk75,308.43 crore.
According to Bangladesh Bank sources, owing to the economic damages caused by political unrest, fifteen big industrial groups had appealed to the Bangladesh Bank for long-term loan rescheduling under the central bank's large-loan restructuring policy.
In response, the central bank, in a major move on January 27, 2015, approved defaulters of large loans – Tk500 crore and above – to reschedule their debts on the grounds that they were affected by “various external and domestic factors beyond their control.”
“The large industrial group misused the Bangladesh Bank restructuring facility,” said a managing director of a private commercial bank, seeking anonymity.
Their restructuring debts became default loans again, he added.
According to central bank statistics, the amount of NPLs in the country’s banking sector stood at Tk99,370 crore, or 11.45% of disbursed loans as of September 2018.
