The actual default loan amount, including that of written-off loan, in the country’s banking sector has surpassed Tk 1 trillion-mark for the first time.
According to Bangladesh Bank’s latest data, the default loan was Tk 594.11 billion up to March. The amount of written-off loan was Tk 412.37 billion till then.
Thus, the aggregate amount of default loans stood at Tk 1,00,648 crore or slightly over Tk 1 trillion.
In the country’s banking sector, the total loan distributed till March 2016 was Tk 5,98,468 crore (5.98 trillion). So, 10 per cent of the amount has become default loan other than the written-off loan.
Only the updated default loan is shown in the documents of Bangladesh Bank, IMF, the World Bank and other organisations, keeping the figure of written-off loan hidden.
Trimming of the ‘bad debts’ or old classified loans from the balance-sheet of the banks, is called ‘writing off loans’. Banks write off loans defaulted for five years or more, keeping 100 per cent provision or security deposit against the loans, and filing cases against the defaulters.
When the Awami League government assumed office in 2009, the amount of default loan was TK 224.81 billion and that of written off loan Tk 156.67 billion, totalling the actual default loan at Tk 381.48 billion.
In the past eight years, the actual default loan increased by Tk 625.00 bilion or 164%.
On this, former Bangladesh Bank deputy governor Ibrahim Khaled said the huge default loan is dangerous for the banking sector. He mentioned that surpassing of the Tk 1 trillion mark is natural due to corruption by the chairmen and managing directors of the state-owned banks.
Private sector banks are also doing aggressive business and Bangladesh Bank cannot play up-to-date role, he siad. He fears whether the loan disbursed during the past several years could be retrieved.
In the last quarter, Tk 80.40 billion turned into default loan in the banking sector. The fiture of default loan at Tk 513.71 billion as of December 2015 rose to Tk 594.11 billion in March this year.
FBCCI president Abdul Matlub Ahmad alleged that bank directors are helping directors of other banks to get loan. “Large amounts of loans are turning into default loans more frequently than the smaller loans,” he observed.
Policy Research Institute’s vice chairman Sadique Ahmed said there is a long term effect of the default loan. Actually, he felt, it is depositors’ money, and the deficit is filled up siphoning off the bank’s capital or reserve money. “The government also has to provide public fund to state-owned banks to make up for the default loan. It cannot be acceptable,” he said, adding that the government banks should stop loan allocation.
Former Bangladesh Bank governor Salehuddin Ahmed said the banks’ loan-disbursement ability has weakened because of the load of default loans. Loan interest rate goes up and depositors’ profit rate decreases when amount of default loan rises.
However, banks are accused of not actively trying to realise the money despite rules to take strong measure towards this end. Also there are allegations of making attempts to hide the illegal loans through writing off them.
Source: Prothom Alo