BB warns 4 banks, 2 NBFIs for industrial loan default

AKM Zamir Uddin

Bangladesh Bank on Wednesday warned four commercial banks and two non-bank financial institutions over their increasing trend in industrial defaulted loans, said central bank officials.
The BB arranged a meeting with the senior officials of the banks and the NBFIs on the day asking them to take measures in order to recover the classified or defaulted loans, a BB official told New Age on Thursday.
The banks and NBFIs are: ICB Islamic Bank, Bangladesh Development Bank, Rajshahi Krishi Unnayan Bank, National Bank of Pakistan, GSP Finance and MIDAS Financing.
The banks and NBFIs were selected as their classified loan crossed 20 per cent of the total disbursed industrial loan, the official said.
According to the BB data till December 31, 2012, the industrial classified loan stood at Tk 121.79 crore in ICB Islamic Bank, Tk 337.59 crore in BDBL, Tk 187.01 crore in RAKUB, Tk 81.09 crore in NBP, Tk 55.61 crore in MIDAS Financing and Tk 16.49 crore in GSP Finance.
The BB official said, ‘We asked the banks and the NBFIs to inform the BB in time-to-time about their strategy to recover the defaulted loans.’
The classified loan in industrial sector has increased due mainly to wrong selection of borrowers by the banks and NBFIs, he said.
The BB inspection report shows that a number of banks and NBFIs have disbursed loans to the same client and the whole amount of loans of the institutions became defaulted in many cases, he said.
The defaulted loan in the industrial sector increased by 47.13 per cent in the first half of the current fiscal year compared with that of the same period of FY 2011-12, the BB data showed.
The classified industrial loan stood at Tk 10,525.94 crore in July to December of FY 2012-13 against Tk 7,154.16 crore in the first six months of FY 2011-12.
The growth in classified loan in July-December of the last fiscal year was a negative 3.09 per cent as the figure in July-December of FY 2010-2011 was only Tk 7,382.01 crore.
BB general manger Sukumal Sinha Chowdhury told New Age that the central bank did not expect that the defaulted loan in the industrial sector would increase under any circumstances.
He said, ‘We always pursue the banks to disburse their industrial loan to the capable clients who are involved with the industrial sector so that the loan will not be defaulted.’
The BB is continuing its strong monitoring on the banks so that they will take proper measures to recover their classified loans, he said.

Source: New Age