By channelizing funds from savers to borrowers, banks help keep the wheels of the economy moving, in the way boosting the confidence of businesses, investors and consumers. But for years, state-owned banks in Bangladesh have been foundering under the weight of bad loans, in lay man’s terms — all thanks to irrational lending and inadequate evaluation and monitoring of the debtors. And today, recovery of this huge pileup of bad loans to government supporters, apart from writing of big loans and free plundering has threaten to derail the country’s economic revival. Every year, billions of taka are being written off.
According to a media report on Saturday, drives for recovering billions of takas as bad loans appear sluggish as most of the state-owned banks each month reclaim only a peanut, officials say, while the bad money is ballooning.
Every year, according to sources, banks have been witnessing a rise in the volume of bad loans which have low possibility to be recovered or the banks themselves have no wish to employ heightened efforts to that end. Last year, the country’s banking sector wrote off some Tk 24.42 billion in bad loans to clean their balance sheet. In 2020 the volume was Tk 9.71 billion, in 2019 some Tk 25.97 billion, and in 2018 they washed up Tk 33.70 billion. Top bankers, however, said usually only the worst case of loans is being written off as they have almost no hope of recovery.
The amount of recovered as bad loans is in no way satisfactory. It is unacceptable that banks will reduce their recovery effort once loans are written off. We understand the economy is in bad shape but who have the bad habit of steeling banks’ money. They do not pay because of economic down turn because they are rich as bank defaulters.
