The ratio of non-performing loans or classified loans against outstanding loans at 16 banks in the country, including nine state-owned banks, stood above 10 per cent at the end of June this year.
The size of NPL of the entities ranged between as high as 97.76 per cent and 10.47 per cent.
The NPL at these 16 banks constitutes Tk 62,733.25 crore or 65.27 per cent of the total Tk 96,116.65 crore defaulted loans in the country’s banking system.
These banks are Janata Bank, Sonali Bank, BASIC Bank, Agrani Bank, AB Bank, Rupali Bank, National Bank, Padma Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, the National Bank of Pakistan, Bangladesh Commerce Bank, ICB Islami Bank, Bangladesh Development Bank, Habib Bank and Probashi Kallyan Bank.
Banking experts said that the NPL ratio at the banks stood high mainly because of lack of governance within the banks and irregularities, putting the money of the depositors at stake.
As a result of the high NPLs, the government has bailed out one of the new generation banks and continued to inject fresh money into the state-owned banks, they said.
No effective measure was taken either by the government or the central bank to contain the irregularities, encouraging the bank money launderers to repeatedly do the same thing, they said.
Instead of taking tough measures to contain the NPLs by punishing the defaulters, the government last year bailed out the loan defaulters by allowing them to reschedule default loans by paying a paltry 2 per cent down payment with a 10-year repayment tenure.
Former Bangladesh Institute of Bank Management director general Toufic Ahmad Choudhury told New Age, ‘When the regulatory forbearance on loan rescheduling would be withdrawn, the NPLs would increase abnormally.’
Apart from people being hit by the coronavirus outbreak, he mentioned that a large number of borrowers had been refraining from repaying bank loans by taking advantage of the BB’s embargo on degrading loans till September this year.
Asked about the reason behind the high NPLs in stateowned banks, Toufic said, ‘Politically motivated policies are the basic reason behind the high default loans in those banks.’
Speaking about the government’s measures to contain the loans, the former BIBM chief said that the government had to take drastic measures to bring down the NPLs once the coronavirus pandemic was over.
In the immediate past fiscal year, the government had mentioned about forming a bank commission but no visible progress was noticed, he said, adding that the initiative to form an asset management company to deal with the issue was a good move but it was progressing at snail’s pace.
The high NPLs is not only putting the depositors’ money at stake but also creating distrust among the international banks through which international trade and businesses are executed, he said.
Apart from the Tk 96,116-crore loans, defaulted loans worth Tk 52,770 crore were regularised in the year 2019 and another Tk 55,553 crore in defaulted loans were written off from the banks’ balance sheet.
Even after the wholesale indemnity, the country’s NPL ratio remained one of the highest among South Asian countries at 9.16 per cent.
Of the banks, the National Bank of Pakistan has the highest ratio of 97.76 per cent, ICB Islami Bank has a ratio of 80.82 per cent, Padma Bank 66.33 per cent, BASIC Bank 51.55 per cent, Bangladesh Commerce Bank 47.76 per cent, Bangladesh Development Bank 39.22 per cent and Rajshahi Krishi Unnayan Bank 30.8 per cent.
Besides, Janata Bank has a ratio of 26.76 per cent, Sonali 21.16 per cent, AB Bank 17.26 per cent, Agrani Bank 14.92 per cent, Rupali Bank 14 per cent, Probashi Kallyan Bank 13.32 per cent, Bangladesh Krishi Bank 12.17 per cent, Habib Bank 10.73 per cent and National Bank 10.47 per cent.
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