Five out of 35 scheduled banks, operating off-shore banking unit, have suffered Tk 447.94 crore in defaulted loans against their exposure through OBUs at the end of 2019.
Sources said that the December-end volume of defaulted loans was Tk 70.53 crore lower than Tk 518.47 crore three months ago.
Offshore banking refers to the particular conduct of banking operations in foreign currencies conditionally approved by Bangladesh Bank.
Experts and bankers said that the growing volume of defaulted loans in the banking sector has been creating risk for the overall banking sector along with creating distrust among the customers.
Although the defaulted loans in the OBUs of the banks was not that significant against 9.32 per cent default loans in the entire banking sector, the banks should be cautious in disseminating loans through their offshore banking units as loans in foreign currencies were issued lower interest rate, they said.
With the change in last quarter of the year, the rate of defaulted loans in OBUs of the five banks has dropped to 0.74 per cent at the December-end quarter from 0.85 per cent in September-end quarter.
The banks are — AB Bank, Dhaka Bank, BRAC Bank, Prime Bank and Woori Bank.
Overall defaulted loans in AB Bank stood at 13.24 per cent, 4.72 per cent in Dhaka Bank, 3.77 per cent in BRAC Bank, 5.13 per cent in Prime Bank, and 3.23 per cent in Woori Bank.
On the other hand, disbursement of loans by the 35 banks through OBUs dropped to Tk 60,628.23 crore at the end of December last year, Tk 421.82 crore down from Tk 61,050.05 crore three months ago.
The scam-hit banking sector has stuffed with Tk 94,331.32 crore in defaulted loans while the 12 banks faced Tk 10,797.87 crore in provision shortfall against their overall defaulted loans at the end of December, 2019.
Overall provision requirement of the banks against their OBUs was Tk 1,017.28 crore against the defaulted loans while they kept Tk 842.98 crore as provision, leaving a shortfall of Tk 174.3 crore.
Of the five Banks, AB Bank was the lone entity that suffered Tk 178.49 crore provision shortfall against their exposure through OBU at the end of December, 2019.
The overall provision shortfall was lower than the individual shortfall of AB Bank as some of those maintained a bit higher provision than the required.
The default of AB Bank was a consequence of the laundering of $20 million from the bank in 2014.
In connection with the laundering, AB Bank, in December last year, filed a lawsuit with the Joint District Judge in Dhaka against 15 individuals including its former chairman and managing directors.
The Bangladesh Bank on February 25, 2019 issued a full-fledged policy for offshore banking.
Afterwards, the central bank, to mitigate the risk factors of OBUs, also made mandatory maintaining cash reserve ratio (CRR) and statutory liquidity ratio (SLR) for the banks against their exposure through offshore banking operations.
The banks had been operating under a government order of 1985 containing loopholes that prompted the central bank to frame a full-fledged policy.
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