Abu Sazzad :
The classified loan in the banking sector stood at Tk 54,708.28 crore as of September 30, 2015. The default loan amount was Tk 50,155.77 crore as of December 31, 2014, according to the latest data of Bangladesh Bank released on Wednesday.
Defaulted loans in the banking sector increased by Tk 4,552.51 crore in the first nine months of this calendar year.
The borrowers did not repay installments for their loans in due time due to dull business situation in the country, traders said.
The defaulted loans had gone down to Tk 52,518.96 crore as of June 30 from Tk 54,657.69 crore as of March 31 of 2015 as banks rescheduled huge amount of classified loans on special consideration avoiding the central bank’s circular.
The BB asked banks to reschedule the defaulted loans by taking lower down payment from the clients on case-to-case basis, which played a role in decreasing the defaulted loans in the second quarter of this year.
Some habitual defaulters had rescheduled their loans in the second quarter of 2015 using the relaxed policy of the central bank and they became defaulters again in the third quarter of this year, fuelling the overall defaulted loans in the banking sector.
The habitual defaulters in recent years showed the excuse that their business suffered due to political unrest and uncertainty.
Lack of good governance in the banking sector is another cause of the rise in the defaulted loans in the banking sector. Many bank directors are often influencing the management of the respective banks to disburse loans to their near and dear ones. Such borrowers failed to repay their loans.
The rise in the defaulted loans in the third quarter is a reflection of lack of good governance in banks.
The defaulted loans stood at 9.89 per cent of the total outstanding loans of Tk 5,53,075.34 crore in the banking sector as of September 30, 2015. It was 9.69 per cent of the total outstanding loans of Tk 5,17,837.43 crore as of December 31, 2014.
According to the BB data, the percentage of defaulted loans in the state-owned banks decreased to 21.82 per cent as of September 30, 2015 from 22.23 per cent as of December 31, 2014.
The percentage of defaulted loans in the private commercial banks increased to 6.09 per cent as September 30, 2015 from 4.98 per cent as of December 31, 2014 and that of foreign commercial banks to 8.79 per cent from 7.30 per cent.
The percentage for specialised banks decreased to 24.68 per cent from 32.81 per cent.
Centre for Policy Dialogue (CPD) Executive Director Mustafizur Rahman said, the industrial sector faced a major setback in last financial year due to political violence that fuelled the defaulted loans in the sector.
The repayment failure of loan is a serious threat for the banking sector, reducing banks’ capability to provide fresh loan for long term in future, he observed. Besides, indiscriminate loan disbursement by banks also resulted in soaring defaulted credit in the industrial sector, he claimed.
There was question about the disbursement process of banks loans. The classified loans in the industrial sector increased in the last fiscal, as banks did not disburse the loans to the proper clients, he further claimed.
The central bank should speed up its monitoring process to ensure the quality of loan disbursement, otherwise the defaulted large loans will increase further, he suggested. Due to an increase in non-performing loans, banks’ financial health will be vulnerable that also will weaken the corporate governance, he observed.
The classified loan in the banking sector stood at Tk 54,708.28 crore as of September 30, 2015. The default loan amount was Tk 50,155.77 crore as of December 31, 2014, according to the latest data of Bangladesh Bank released on Wednesday.
Defaulted loans in the banking sector increased by Tk 4,552.51 crore in the first nine months of this calendar year.
The borrowers did not repay installments for their loans in due time due to dull business situation in the country, traders said.
The defaulted loans had gone down to Tk 52,518.96 crore as of June 30 from Tk 54,657.69 crore as of March 31 of 2015 as banks rescheduled huge amount of classified loans on special consideration avoiding the central bank’s circular.
The BB asked banks to reschedule the defaulted loans by taking lower down payment from the clients on case-to-case basis, which played a role in decreasing the defaulted loans in the second quarter of this year.
Some habitual defaulters had rescheduled their loans in the second quarter of 2015 using the relaxed policy of the central bank and they became defaulters again in the third quarter of this year, fuelling the overall defaulted loans in the banking sector.
The habitual defaulters in recent years showed the excuse that their business suffered due to political unrest and uncertainty.
Lack of good governance in the banking sector is another cause of the rise in the defaulted loans in the banking sector. Many bank directors are often influencing the management of the respective banks to disburse loans to their near and dear ones. Such borrowers failed to repay their loans.
The rise in the defaulted loans in the third quarter is a reflection of lack of good governance in banks.
The defaulted loans stood at 9.89 per cent of the total outstanding loans of Tk 5,53,075.34 crore in the banking sector as of September 30, 2015. It was 9.69 per cent of the total outstanding loans of Tk 5,17,837.43 crore as of December 31, 2014.
According to the BB data, the percentage of defaulted loans in the state-owned banks decreased to 21.82 per cent as of September 30, 2015 from 22.23 per cent as of December 31, 2014.
The percentage of defaulted loans in the private commercial banks increased to 6.09 per cent as September 30, 2015 from 4.98 per cent as of December 31, 2014 and that of foreign commercial banks to 8.79 per cent from 7.30 per cent.
The percentage for specialised banks decreased to 24.68 per cent from 32.81 per cent.
Centre for Policy Dialogue (CPD) Executive Director Mustafizur Rahman said, the industrial sector faced a major setback in last financial year due to political violence that fuelled the defaulted loans in the sector.
The repayment failure of loan is a serious threat for the banking sector, reducing banks’ capability to provide fresh loan for long term in future, he observed. Besides, indiscriminate loan disbursement by banks also resulted in soaring defaulted credit in the industrial sector, he claimed.
There was question about the disbursement process of banks loans. The classified loans in the industrial sector increased in the last fiscal, as banks did not disburse the loans to the proper clients, he further claimed.
The central bank should speed up its monitoring process to ensure the quality of loan disbursement, otherwise the defaulted large loans will increase further, he suggested. Due to an increase in non-performing loans, banks’ financial health will be vulnerable that also will weaken the corporate governance, he observed.
