Defaulted loans in the country’s banking sector neared Tk 90,000 crore by the end of June as amount of such loans soared by 20.23 per cent or Tk 15,037 crore in the first six months of this year.
Experts point out the loans that were restructured last year again became defaulted or classified in absence of any strict measures by the regulators against the willful defaulters amid lack of political will.
As per Bangladesh Bank data released on Monday, defaulted loans increased to Tk 89,340 crore as of June 30, 2018 from Tk 74,303 crore as of December 31, 2017.
The amount of total defaulted loans, however, would be Tk 1,38,000 crore if around Tk 50,000 crore in write-off loans were added. BB will release data on write-off loans in the coming months.
Former Bangladesh Bank governor Salehuddin Ahmed told New Age on Monday, ‘People involved with the loan nonpayment are very much influential and linked with other influential quarters as well as politics. That’s why banks are failing to recover the loans with strong hand.’
If such trend continued, he warned, it would be difficult to overcome the situation in future.
On the other, policy measures from the central bank in terms of rewarding or punishing the banks for their activities are absent, he noted.
Mentioning lack of political willingness as a major reason, Salehuddin said that the situation could be different if the political will was there.
BB data show that the amount of defaulted loans rose by Tk 14,286 crore during the January-March quarter this year and Tk 751 crore during the second quarter.
In the September-December quarter last year, defaulted loans declined to Tk 74,303 crore from Tk 80,307 crore in July-September quarter mainly due to restructure facility allowed by the central bank.
As per the central bank data, 57 scheduled banks rescheduled Tk 19,120 crore in 2017.
Former interim government adviser AB Mirza Azizul Islam told New Age, ‘Rise in defaulted loans must be checked, otherwise the country’s banking sector will be in serious problem.’
‘To overcome the situation, it will require strong political will. Political influence has to be resisted in loan sanction and recovery process,’ Azizul suggested, however, expressing his disappointment that he did not see any symptom of such political will as election was coming nearer.
He also suggested expeditious disposal of loan-related cases, which were pending for long, along with exemplary punishment for the deliberate offenders.
Azizul at the same time fears money laundering ahead of the national polls.
Putting aside fund for polls-time use might be another reason behind the rise in classified loan, he pointed out.
As per the central bank data, the classified loan was 10.41 per cent of the outstanding loan of the banks — Tk 8,58,521 crore at the end of June 2018.
Classified loan in six state-owned commercial banks —Sonali, Agrani, Janata, Rupali, BASIC and Bangladesh Development Bank Limited — increased to Tk 42,852 crore at the end of June 2018 from 37,326 crore on December 31, 2017.
The classified loan was 28.24 per cent of their total disbursed loans.
Classified loans in the state-owned banks, however, declined a bit considering Tk 43,685 crore at the end of March this year.
Classified loans in the private banks, however, increased by Tk 9,579 crore to Tk 38,975 crore at the end of June this year from Tk 29,396 crore at the end of December, 2017.
In two specialised banks, classified loans increased to Tk 5,241 crore while the figure increased to Tk 2,271 crore in foreign commercial banks.
The banking sector has been mired in growing bad loans following detection of series of loan scams and embezzlements, including Hallmark Group scam in Sonali Bank, shady loan of BASIC Bank, AnonTex and Bimsmillah Group’s loan scams in Janata Bank and fund embezzlement in Famers Bank Limited and NRB Commercial Bank.
Sonali has failed to recover a single penny of Tk 3,500 crore gulped by little known Hallmark Group in 2013. BASIC Bank is facing severe capital shortfall because of shady loans of Tk 6,000 crore, given during the tenure of its previous board of directors led by its chairman Sheikh Abdul Hye Bacchu, allegedly appointed on political consideration. Janata Bank is facing loan scam of over Tk 5,000 crore given to little known AnonTex Group.
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