The central bank has asked all scheduled banks to furnish it with the details of loans they have written off in the last one year along with particulars of top written-off accounts.
It also asked them to provide information of their loan recovery position of top 20 written-off accounts.
The central bank came up with the directive following reports that banks are randomly writing-off their bad loans violating norms.
“We have sent letters to the managing directors and chief executive officers of all scheduled banks on Sunday, asking them to send the information to the Bangladesh Bank (BB) within seven working days,” an Executive Director of BB told The New Nation yesterday.
He said the write-off have increased considerably in the last one year underlining the need for investigation into the matter.
“There are allegations banks are violating regulatory norms while writing off bad loans. The move of BB will help determine whether banks violated regulatory norms or not. If banks found involved in breaching norms, remedial action would be taken against them,” he added.
The central bank introduced guidelines for writing-off classified loans in 2003 aiming to improve loan recovery and make the financial statements of banks more transparent and accountable.
According to the BB statistics, banks have altogether written-off a whopping Tk 41,437 crore loans as of March 31 this year whereas the amount was Tk 37,252 crore as of March 31 last year.
The cumulative written-off loans by the banks rose by nearly Tk 200 crore to Tk 41,437 crore during the first quarter of the current calendar year from Tk 41,237 crore three months ago.
During the January-March 2016 period, the amount of written-off loans by six state-owned commercial banks (SoCBs) rose to Tk 22,078 crore from Tk 22,067 crore in the previous quarter.
On the other hand, a total of Tk 18,041 crore loans were written-off by 39 private commercial banks (PCBs) during the period under review against Tk 17,910 crore three months ago.
Loans, written-off by nine foreign commercial banks (FCBs), rose to Tk 764 crore in the first quarter of 2016 from Tk 706 crore in the previous quarter.
“The written off amount has increased by more than 11 per cent in the last one year indicating banks randomly persuading the policy to reduce bad loans from their books of accounts,” Dr Khondoker Ibrahim Khaled, former BB deputy governor told The New Nation yesterday.
Under the existing provisions, the bad loan portfolios remaining for a period longer than five years will come under the provision of writing off. Before making any final decision in this regard, the bank management has to ensure 100 per cent provisioning against the amount to be written-off.
“In many cases, banks are violating the provisions by settling the bad loans due to their better profitability and also to clean their balance sheets,” he said, adding, “BB should take stringent measure to stop such illegal practice.”
