The International Chamber of Commerce Bangladesh on Wednesday said that the ballooning volume of non-performing loans (defaulted loans) had become a curse for the country’s sustainable growth.
The chamber came up with the statement in its quarterly news bulletin editorial for the period of January-March this year, said an ICCB media release on the day.
Calling for further efforts to tackle deep-rooted problems of corruption and poor risk practices in the banking sector, it said, ‘Only limited action has been taken to penalise defaulters, improve risk management and strengthen bank management.’
Seeking all out efforts to strengthen the banking system to keep the economy stable, the ICCB said that the NPL has become one of the issues that was impacting capital adequacy of the banking sector, especially of the eight state-owned commercial and specialised banks which were the prime lender to the large corporate borrowers, particularly of the industrial sector.
It also mentioned the role of commercial banks for mobilising internal savings and providing capital to the investors.
According to a Bangladesh Bank study, until September 2017, the total banking sector loan amounted to Tk 7,527.30 billion, of which Tk 803.07 billion or 10.67 per cent was bad debt, the ICCB editorial said.
If restructured or rescheduled loans were included, the NPL in the banking sector goes up to 17 per cent of total outstanding loans, it said.
By the end of September, the total bad debt of state-owned commercial banks stood at Tk 385.17 billion or 29.25 per cent of the disbursed loans worth Tk 1,316.89 billion, it said.
These high NPLs have affected the profitability and the overall capital to risk weighted assets ratio, a key measure of bank strength and stability, the ICCB editorial said.
It also said that the CRAR at private banks was 12.2 per cent, 23.9 per cent at nine foreign banks, 5.9 per cent at six state-owned commercial banks and 35.23 per cent negative at two specialised state-owned banks.
Routine restructure of bad loans have been resulting in further lending to the same borrowers, said the ICCB.
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