DEFAULT loans in the industrial sector is on the rise, says a report of an English daily on Friday. Though the ongoing political turmoil is blamed in general, but the ineptness and corruption of the bank officials in disbursing loan violating rules and regulations, together with the culture of plundering bank money by the politically blessed industrialists and their reluctance to pay back the loans on regular basis are the other causes responsible for such loan default increases. Experts fear, if the current political volatility persists, the ratio of the default loans will increase further as it will be made into a reason for not paying loans.
The central bank data shows that the industrial default loans stood at Tk 17,810.75 crore in July-December of the current fiscal against Tk 11,293.34 crore in the same period of the last fiscal year. The default loans increased by 57.70 percent in the first half (H1) of this fiscal year FY 2014-15 compared to the corresponding period of the FY 2013-14. Bangladesh Bank officials said, a number of banks earlier sanctioned a huge amount of loans ignoring rules and regulations resulting in a rise in default loans. As a result, a large amount of industrial loans went to inefficient firms during FY 13-14. So, the default loans in the industrial sector sky-rocketed in the period.
Like the past years, the state owned banks are at the top in advancing industrial loans as well as having the burden of a huge volume of default loans. The recent data of default loans shown by the Bangladesh Bank has, therefore, raised a fear among the concerned ones that a dubious play is still going on in the banking sector. Some vested quarters are again seen active in this sector to take the opportunity of the present political impasse. Corruption inside the banks by their officials in assessing, apprising and risk analyzing of the loan case(s), approving and disbursement and subsequent supervision as well as follow-up should be strictly monitored and curbed so that no loan goes in default. Moreover, there should be strong internal audit systems which function on routine schedules.
We urge the central bank to initiate a politically unbiased investigation as to why the default loan has increased in the current fiscal. It has to ensure that no one takes the opportunity of the current unrest to grab public money showing violent politics as an excuse. Bangladesh Bank, moreover, should pay attention as to whether the ransacked money from the banks passes across the border to get shelter abroad as deposits for second homes or in Swiss Banks. Banks must do their business by putting the people’s interest as their first priority.
The central bank data shows that the industrial default loans stood at Tk 17,810.75 crore in July-December of the current fiscal against Tk 11,293.34 crore in the same period of the last fiscal year. The default loans increased by 57.70 percent in the first half (H1) of this fiscal year FY 2014-15 compared to the corresponding period of the FY 2013-14. Bangladesh Bank officials said, a number of banks earlier sanctioned a huge amount of loans ignoring rules and regulations resulting in a rise in default loans. As a result, a large amount of industrial loans went to inefficient firms during FY 13-14. So, the default loans in the industrial sector sky-rocketed in the period.
Like the past years, the state owned banks are at the top in advancing industrial loans as well as having the burden of a huge volume of default loans. The recent data of default loans shown by the Bangladesh Bank has, therefore, raised a fear among the concerned ones that a dubious play is still going on in the banking sector. Some vested quarters are again seen active in this sector to take the opportunity of the present political impasse. Corruption inside the banks by their officials in assessing, apprising and risk analyzing of the loan case(s), approving and disbursement and subsequent supervision as well as follow-up should be strictly monitored and curbed so that no loan goes in default. Moreover, there should be strong internal audit systems which function on routine schedules.
We urge the central bank to initiate a politically unbiased investigation as to why the default loan has increased in the current fiscal. It has to ensure that no one takes the opportunity of the current unrest to grab public money showing violent politics as an excuse. Bangladesh Bank, moreover, should pay attention as to whether the ransacked money from the banks passes across the border to get shelter abroad as deposits for second homes or in Swiss Banks. Banks must do their business by putting the people’s interest as their first priority.
