Bad loans in the country’s banking system have increased to around Tk 1,00,000 crore amid a lack of political commitment to recovering defaulted loans.
At the end of September this year, defaulted loans rose to Tk 99,370 crore, 11.48 per cent of Tk 8,65,930 crore total outstanding loans in the country’s banking system, according to Bangladesh Bank latest data.
At the end of June, defaulted loans were Tk 89,340 crore, which means the latest amount of defaulted loans marked a rise of 11.23 per cent or Tk 10,030 crore in state-owned, private commercial, foreign and specialised banks.
If Tk 48,053 crore write-off loans were taken into consideration, the total amount of defaulted loans would be Tk 1,47,423 crore.
The defaulted loans were Tk 80,307 crore in 2017, the penultimate year of the successive second tenure of the government, up from Tk 22,482 crore in 2009, when the AL-led government assumed office.
Former Bangladesh Bank governor Salehuddin Ahmed told New Age that the classified loans in the country’s banking system were increasing rapidly mainly for lack of political commitment.
Banks’ directors, businesses along with other retired government officials close to the political power were using the scope of political unwillingness to escape legal measures and remained unscratched despite not repaying bank loans, Ahmed observed.
The central bank should go tough on the defaulters and banks by disallowing branch opening and not providing REPO facility, barring refinance facility besides using other regulatory tools to contain defaulted loans, he said.
Moreover, lack of seriousness of the bankers, legal barrier, lack of scrutiny in sanctioning loans and a culture of impunity are further encouraging bank loan non-payment, the former BB governor said.
As of September, default loans in six state-own commercial banks — Sonali, Agrani, Janata, Rupali, BASIC and Bangladesh Development Banks — stood at Tk 48,080 crore or 31.23 per cent of the total Tk 1,53,933 crore outstanding loans of the banks.
In private commercial banks, defaulted loans stood at Tk 43,666 crore or 6.65 per cent of Tk 6,56,415 crore outstanding loans in the banks.
Foreign banks’ defaulted loans stood at Tk 2,382 crore or 7.54 per cent of the total Tk 31,582 crore outstanding loans.
Defaulted loans of two specialised banks — Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank — stood at Tk 5,242 crore or 21.84 per cent of the total Tk 24,000 crore outstanding loans in the banks.
Embezzlement of fund from the banks stunned even the bankers amid detection of loan scams of Bismillah Group, Hallmark Group and BASIC Bank.
Bismillah Group swindled about Tk 1,100 crore from state-run Janata Bank in 2012 while Hallmark Group misappropriated about Tk 3,500 crore from largest state-owned Sonali Bank in 2013.
BASIC Bank’s loan scams occurred due to extension of fictitious loans of over Tk 6,000 crore by the bank’s board of directors appointed politically and run by former chairman Abdul Hye Bacchu between 2009 and 2014.
Anti-Corruption Commission failed to bring any charge against BASIC board of directors, including Abdul Hye Bacchu, although a central bank probe found involvement of the former BASIC bank chairman in loan scams that led the once profit-making bank to face almost bankruptcy.
On June 30, 2015, finance minister AMA Muhith told parliament that action could not be taken against Bacchu because of ruling Awami League leaders.
The government gave promotion to almost of all members of controversial board of the directors of BASIC Bank.
Shuvashish Bose and Syam Sunder Sikder, two of the six public servants serving as directors to BASIC Bank, during the period of loan scams, had been promoted to secretary.
Instead of taking measures in containing loan irregularities, the government sanctioned Tk 9,788 crore for the scam-hit state-owned banks, including Sonali, BASIC and Janata, between 2012-2013 and 2016-17.
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