Until every loan granted by state-owned banks is subject to careful monitoring, it will be very hard to keep in check this unchecked growth of bad loans.
Bangladesh’s banking sector now has over Tk80,000 crores worth of bad loans — that is a whopping $10 billion.
These bad loans account for more than 10% of the loans granted, and unsurprisingly, the main culprits are state-owned banks.
Bad debts have continued to plague Bangladeshi banks for a while now, and it is high time something was done about this bad loan culture — a culture that has done colossal damage to our banking sector.
In the last three months alone, this amount has risen by over Tk6,000cr.
The SoBs responsible show no signs of changing their practices, and continue to operate in a disastrously inefficient manner.
State-owned banks function without proper management — they persist in flouting the rules and issuing loans which go against the government regulations. SoBs are currently seeing some 30% of loans granted as bad debt.
It is imperative that these institutions are reined it before they wreak further havoc on the economy. It is almost unfathomable how these banks have been allowed to operate the way they have for so long.
The increasing rate of bad debt could end up crippling our nation, which has shown admirable growth in the private sector despite tremendous obstacles.
As experts have said over and over again, the solution lies in good governance.
Until each and every loan granted by state-owned banks is subject to careful monitoring, it will be very hard to keep in check this unchecked growth of bad loans.
And ultimately, every citizen will pay the price.
Source: Dhaka Tribune.
