The amount of defaulted loans in the industrial sector increased by 24.75 per cent or Tk 10,795.29 crore as of September 30 last year as most of the bad loans that had been rescheduled in 2015 under a special loan restructuring facility for the sector became defaulted again.
According to BB data, the amount of industrial non-performing loans increased to Tk 54,416.01 crore at the end of September last year from Tk 43,620.72 crore a year ago.
Of the total amount, the defaulted loans of large industries stood at Tk 35,025.15 crore, medium industries at Tk 12,062.95 crore and small industries at Tk 7,327.90 crore at the end of September, 2019.
Officials of the BB said that the maximum amount of industrial loans, disbursed to the large borrowers who enjoyed restructuring facility under a special BB scheme in 2015, had failed to repay their loans, thus resulting in the surge in defaulted loans.
‘The large industrial groups misused the Bangladesh Bank restructuring facility,’ said a managing director of a private commercial bank, adding that their restructuring debts became defaulted loans again.
According to the central bank data, the total loan disbursement in the industrial sector stood at Tk 1,08,848.93 crore at the end of September last year, up from Tk 94,419.65 crore at the same time a year ago.
Of the total disbursement in the industrial sector, Tk 89,491.99 crore was disbursed to large industries, Tk 10,770.30 crore to medium industries and Tk 8,586.64 crore to the small industries, as on September, 2019.
Experts and bankers blamed lack of good governance, corruption, political interference in approving loans, and a culture of impunity for the surge in NPL.
They also said that wilful defaulters were becoming defaulters in every sector.
Showing economic damages caused by political unrests as an excuse, 15 big industrial groups had appealed to the Bangladesh Bank for long-term loan rescheduling under the central bank’s large-loan restructuring policy, according to Bangladesh Bank sources.
In response, the central bank, in a major move on January 27, 2015, approved defaulters of large loans – Tk 500 crore and above – to reschedule their debts on the grounds that they were affected by ‘various external and domestic factors beyond their control’.
The total non-performing loans of banks rose by a staggering Tk 3,863.14 crore in three months till September last year, taking the amount of stress loans in the banking sector to Tk 1,16,288.31 crore.
Meanwhile, the Bangladesh Bank data released on Wednesday showed that the private sector credit growth dropped to 9.83 per cent in December, 2019, the fresh low since 2008.
As per the BB data, credit to the private sector increased to Tk 10.53 lakh crore at the end of December last year from Tk 9.59 lakh crore a year ago.
In July last year, the BB projected 13.2 per cent private sector credit growth for the first half of the fiscal year 2019-2020.
The private sector credit growth has been falling for last several months because mainly of the government’s heavy borrowing from the banking sector.
In November last year, the credit to the private sector dropped to 9.87 per cent.
To meet deficit financing, the government’s borrowing from the banking sector grew by 59.81 per cent to Tk 1,56,860 crore at the end of December last year from Tk 98,152 crore a year ago.
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