The amount of industrial sector defaulted loans in the July-September period of this fiscal year increased by Tk 3,694.21 crore from that in the same period of last fiscal year due to a lack of effective loan recovery measures on the part of scheduled banks and non-bank financial institutions.
An economist and Bangladesh Bank officials said some businessmen had recently wilfully defaulted on loans that fuelled the non-performing loans in the banking sector.
Besides, the industrial sector faced a major setback in recent months due to political uncertainty, fragile law and order situation, and credit indiscipline in the banks and NBFIs that also played a role in increasing the classified loans in the sector, they said.
According to the latest BB data, the defaulted industrial loans stood at Tk 23,996.60 crore in the first three months of FY 2016-17, 18.20 per cent up from Tk 20,302.39 crore registered in the same period of FY 2015-16.
‘The country’s banking sector has been facing credit indiscipline for long as some persons did not repay their bank loans in due time,’ former interim government adviser AB Mirza Azizul Islam told New Age on Tuesday.
He said that some businessmen took loans from banks and they eventually became wilful defaulters fuelling the defaulted loans.
The government often claims that the country’s business sector is doing fine but the classified loans in the banking sector continue rising, he said.
The government and the central bank should take strict measures against the wilful defaulters to bring credit discipline in the banking sector, Mirza Aziz said.
He said that some directors had taken loans from other banks through mutual understanding that also increased the non-performing loans in the industrial sector, he said.
Banks and NBFIs distributed Tk 62,438.98 crore in industrial loans in the first
quarter of FY17 compared with Tk 53,984.70 crore disbursed in the July-September period of FY16, the BB data showed.
A BB official said a section of people continued to take loans from banks and NBFIs, but they were not refunding the amount in due time.
They took loans for one purpose but diverted the fund into another scheme and the malpractice also increased the defaulted loans in the industrial sector, he said.
He said, ‘To get more loans, the businesspeople had convinced the banks that their previous loans would be defaulted due to sluggish business, if fresh loans were not disbursed to them.’
The industrial loan disbursement by five state-owned commercial banks — Sonali, Janata, Agrani, Rupali and BASIC — increased by 3.95 per cent to Tk 1,170.67 crore in the first three months of FY17 compared with that of Tk 1,126.22 crore in the same period a financial year ago.
The industrial defaulted loans in the SCBs increased by 40.36 per cent to Tk 7,014.73 crore in the first three months of FY17 compared with that of Tk 4,997.75 crore in the same period of FY16.
The industrial loan disbursement by three state-run specialised banks — Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, and Bangladesh Development Bank — decreased by 22.81 per cent to Tk 630.68 crore in the first three months of FY17 compared with that of Tk 817.08 crore in the same period of FY16.
The industrial defaulted loans in the specialised banks, however, increased by 7.77 per cent as their non-performing loans stood at Tk 4,204.24 crore in the first quarter of FY17 against Tk 3,901.07 crore in the same period of FY16.
The private commercial banks disbursed Tk 46,423.35 crore in industrial loans in the July-September period of FY17, 14.37 per cent up from Tk 40,589.01 crore in the first quarter of FY16.
The industrial defaulted loans in the PCBs increased to Tk 9,830.20 crore in the first three months of FY17 from that of Tk 8,136.81 crore in the corresponding period of FY16.
The foreign commercial banks disbursed industrial loans amounting to Tk 10,153.49 crore in the first quarter of FY17 against Tk 7,860.10 crore they had distributed in the same period of FY16, while their industrial defaulted loans decreased to Tk 567.31 crore from Tk 767.83 crore year-on-year.
The NBFIs disbursed industrial loans amounting to Tk 4,060.79 crore in the first three months of FY17 against Tk 3,592.29 crore they had disbursed in the same period FY16, while their industrial defaulted loans decreased to Tk 2,380.12 crore from Tk 2,498.93 crore year-on-year.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Miscellany