Habitual defaulters with no intention to pay back have reportedly been able to reschedule a big amount of their bad loans last year under a ‘special policy’ offered by the central bank.
Banks have altogether rescheduled Tk 26,308 crore in bad loans in 2015 taking advantage of the special loan rescheduled policy, official sources said.
The central bank offered the policy under the pressure of a powerful quarter comprising big borrowers and business tycoons, leaving the corresponding banks with nothing to recover their outstanding loans piled up over the years.
“Banks have apparently failed to recover money from the ‘Habitual defaulters’ as they are influential in political circles and bureaucracy, and have the money power to fight long legal battles,” Dr Salehuddin Ahmed, a former Bangladesh Bank (BB) Governor, told The New Nation yesterday.
Terming the BB’s special loan rescheduled policy as a ‘pervasive incentive’ for the ‘Habitual defaulters,’ Dr Salehuddin Ahmed said BB should not provide such a facility when the banking sector is sinking due to large loan scandals and growing default culture.
He observed that the commercial banks, especially state-owned ones, are finding it hard to recover bad loans from the influential borrowers due mainly to management inefficiency and corruption.
“Recovery of the bank’s money will require coordinated action among the central bank, other sector regulators and the government. The BB, as the banking regulator, should take the initiative,” suggested Dr Salehuddin Ahmed.
The former BB Governor also mentioned that the banks are now grappling with huge defaulted loans and the situation is particularly grim at the public commercial banks.
“The main cause of the rising defaults at public banks is that the loans were given through anomalies and political influence. Besides, the loans were never monitored and actions taken against the defaulters to realise the outstanding loans,” he added.
According to the latest BB data, banks have altogether reported Tk 63,365 crore defaults amount which is 10.06 per cent of their total outstanding loans.
“Habitual defaulters always escape from pay off bank money using their political influence and money power. Sometimes policies of the central bank also help them to do such bad practices,” Dr Ibrahim Khaled, a former BB deputy governor, told The New Nation yesterday.
He said, “Our recent experience suggested that banks always try to facilitate big borrowers and corporate groups by allowing multiple rescheduling for a longer period. They later turned into habitual or willfull defaulters taking advantage of the facility”.
They should not be allowed to do such unethical practices because it is depriving the honest borrowers as well as eroding financial health of the financial institutions. They should be brought under the book to ensure discipline in the banking sector, said Dr Ibrahim Khaled.
“It’s high time that the government, the judiciary and the BB to come out with a plan of action on how to deal with habitual defaulters. On top of this, a strong political will of the government is necessary to come out from the growing default culture, recovery of money from the defaulters and ensure stability of the banking sector,” he suggested.
