Tk 100cr more NBFI loans become defaulted in Q2

Staff Correspondent | Published: 00:00, Nov 14,2019


The amount of defaulted loans in the non-bank financial institutions increased further by Tk 100 crore to Tk 7,320 crore in the second quarter (April-June) of 2019 from Tk 7,220 crore in the January-March quarter, reflecting more deterioration of the sector that witnessed massive irregularities.

Earlier, the non-performing loans of People’s Leasing and Financial Services (PLFS) Limited was included in calculating NPLs in the NBFI sector.

But, the Bangladesh Bank excluded the figure from its latest report as the liquidation of PLFS was underway as its 70 per cent loans turned defaulted.

Out of the PLFS’ Tk 1,131 crore disbursed loans, Tk 748 crore had become defaulted, as per the BB data.

If the figure was included, the amount of defaulted loans in the NBFI sector would have been Tk 8,068 crore.

Amid growing public distrust and series of scams in the financial sector, the outstanding loans and leases of NBFIs dropped to around Tk 66,545 crore at the end of June this year from around Tk 70,106 crore in the previous quarter.

As per the BB’s Financial Stability Assessment Report released last week, the amount of defaulted loans in the NBFI sector was 11 per cent of loans and advances, up 0.7 percentage points.

The NPLs in the NBFI sector were 7.9 per cent and 10.3 per cent respectively in October-December and January-March quarters respectively.

In January-March of 2019, the amount of defaulted loans in the NBFI sector rose by 32.3 per cent to Tk 7,220 crore from Tk 5,460 crore in the October-December quarter of 2018, according to the BB’s Financial Stability Assessment Report for the period of January-March this year.

IDLC Finance chief executive officer and managing director Arif Khan told New Age, ‘The figure of NPLs itself tells us that the trend is not heading towards progress.’

To make improvement, collective measures must be taken, he said.

‘The entities, which are suffering from high non-performing loans, should be brought under tight supervision,’ he said, adding that the board and the management of those entities also should act properly to make improvement.

However, there are some entities which hold very nominal amount of NPLs, Arif said.

For instance, IDLC’s NPLs have been around 2.5 per cent, he said.

He, however, mentioned that the NPLs in NBFIs were 7-8 per cent against around 11 per cent NPLs in the banking sector but, the rate increased in recent times and it was usual in the current context in the country.

The volume of defaulted loans in the country’s NBFI sector has been swelling amid a series of scams and irregularities.

Besides PLFS, a mounting volume of defaulted loans in Bangladesh Industrial Finance Company has also prompted the central bank to seek finance ministry’s approval for the liquidation of the entity.

The ministry, however, is yet to respond to the BB plea.

The company has refrained from disbursing fresh loans as 98 per cent of its loans have become defaulted.

As per the central bank’s report, only four out of 34 non-bank financial institutions were positioned in the green zone, 18 in the yellow zone and 11 including PLFS and BIFC in the red zone.

The amount of non-performing loans in the country’s banking sector increased to Tk 2.2 lakh crore at the end of March this year. Of the amount, Tk 1.12 lakh crore was recoverable, while Tk 30,000 crore was not recoverable and the recovery of loans amounting to Tk 80,000 crore was stalled by courts.

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