The eight state-run banks held 54.07 per cent or Tk 40,099.19 crore of the total defaulted loans in the country’s banking sector as of June 30, 2017 as the banks disbursed large amounts of loans to their clients violating rules, Bangladesh Bank officials said.
The amount of the total defaulted loans in the banking sector stood at Tk 74,148.54 crore as of June 30, 2017.
Sonali Bank, Rupali Bank and BASIC Bank also failed to keep required provisions against their disbursed loans and advances at the end of June due to a drop in their operating profits.
The five other state-run banks are: Janata Bank, Agrani Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Bangladesh Development Bank.
A BB official told New Age on Thursday that the defaulted loans in the banking sector including that in the state-run banks increased significantly in the first half of 2017 as the central bank had recently discovered a number of loans scams in the banks.
According to the BB data, the amount of defaulted loans in the banking sector increased by Tk 11,976.22 crore to Tk 74,148.54 crore as of June 30, 2017 from Tk 62,172.32 crore as of December 31, 2016.
Former interim government adviser Mirza Azizul Islam earlier told New Age that financial stability in the banking sector would decrease more if the banks failed to curb the upward trend in the defaulted loans.
He said, ‘The excessive defaulted loans will create a risky situation for the depositors. So, the authorities concerned should take immediate measures to control the non-performing loans in the interest of the whole financial sector.’
The BB, the finance ministry and the law ministry should take a joint initiative to bring down the defaulted loans in the banks, he said.
The large amount of defaulted loans has already put an adverse impact on the good borrowers as they have to count against their bank loans higher interest rates stemmed from the non-performing loans in the banking sector, he said.
The BB data showed that the amount of defaulted loans in Sonali Bank stood at Tk 11,421.11 crore, that in Janata Bank at Tk 5,340.52 crore and that in Agrani Bank at Tk 4,904.29 crore as of June 30, 2017.
The amount of non-performing loans in Rupali Bank stood at Tk 4,759 crore, that in BASIC Bank at Tk 7,390 crore, that in BDBL at Tk 764.75 crore, that in BKB at Tk 5,464.78 crore and that in RAKUB at Tk 1,185.86 crore as of June, 2017, the data showed.
The BB official said that excessive defaulted loans in the state-owned commercial banks had created a very alarming situation in the country’s banking sector.
The classified loans in private and foreign commercial banks are comparatively lower than that in the SCBs, he said.
The rising defaulted loans have also put an adverse impact on the rates of interest on lending, he said.
He said banks set their interest rates calculating the provision against classified loans, cost of fund and considering their respective profit targets.
For this reason, banks will have to reduce their defaulted loans to decrease the rates of interest on lending, he said.
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