Amid concerns over loss of business due to unprecedented political turmoil, banks in Bangladesh have reported a drop in quantum of default loans during last quarter of 2013.
But rescheduling of default loans by the central bank could be responsible for the drop, according to experts.
Bangladesh Bank statistics suggests a drop in default loans in the last quarter of 2013 (Oct-Dec) by TK 152.97 billion over the previous quarter (July-September, 2013).
The latest Bangladesh Bank report suggests the total quantum of default loans at end of December 2013 was Tk 414.23 billion.
That was 8.93 percent of the total bank loans disbursed so far.
Amid massive disruptions caused by then main opposition and its allies, business owners reported losses and called on banks to reschedule their loans to help them tide over the crisis.
On 22 Dec, Bangladesh Bank organised a customers’ conclave, after which it was decided to reschedule loans and ease conditions of one-time down payment.
The Bank Company Act, however, stipulates a 10 to 30 percent down payment for rescheduling default loans.
“One of the reasons behind the drop in default loans is Bangladesh Bank’s option regarding loan rescheduling,” BRAC Bank’s Managing Director Syed Mahbubur Rahman told bdnews24.com.
“However, the collection (loan repayment) in December has been higher, because banks pushed for repayment in the last quarter (of the year).”
Besides that, many banks rescheduled the Small and Medium Enterprises (SME) loans on their own without turning to the central bank, said Rahman.
According to him, many banks took ‘unethical advantage’ of the central bank’s option to reschedule default loans because more than 500 large-size loans, approved for rescheduling from Dec 22 to February, have nothing to do with political unrest.
By the end of 2013’s last quarter banks had disbursed Tk 4,638 billion.
8.93 percent of that was default loans — down from 12.79 percent in the third quarter of 2013, when total quantum of loans disbursed stood at TK 4.434 billion.
Default loans stood 10.3 percent of the total disbursed in 2012’s last quarter, which was Tk 20 billion more than the total default loans in 2011.
Source: Bd news24