49 banks at risk of facing new defaulted loans of Tk 5,570cr [ Tritiyo Matra News ]

49 banks at risk of facing new defaulted loans of Tk 5,570cr

Local November 17, 2015

Bangladesh Bank has assessed that 49 banks are at risk of facing up to Tk 5,570.14 crore in fresh non-performing loans at the end of this year.
The estimation has been made considering the existing unclassified overdue loans of the banks.
According to a BB report, 737 branches of the 49 banks had Tk 11,140.29 crore in unclassified overdue loans along with Tk 7,327.21 crore in defaulted loans as of August 31, 2015.
The report said that even if the banks recover half of the unclassified overdue loans, there would a risk that the rest 50 per cent, or Tk 5,570.14 crore, would be defaulted.
Against the backdrop, the central bank on November 2 sent letters to the 49 banks, asking them to expedite the recovery of the unclassified overdue loans, for which clients did not give 1-2 instalments, said BB officials.
The BB data showed that the overall defaulted loans in the banking sector stood at Tk 52,516 crore as of June 30, 2015.
The central bank’s integrated supervision system discovered the unclassified overdue loans and it considered that 377 out of the 737 branches were in the dangerous zone considering their volume of unclassified overdue loans.
The ISS of the central bank also said 219 branches were in the alarming zone due to their high volume of unclassified overdue loans.
The BB marked the 737 branches of the 49 banks as risky as the branches’ unclassified overdue loans were between Tk 2 crore and Tk 99.51 crore.
The November 2 BB letter said that the overdue loans would be turned into the defaulted loans in the coming days if the banks did not take adequate measures to recover the loans in the quickest possible time.
The BB also asked the 49 banks to submit their recovery data of the unclassified overdue loans to its ISS cell by 10th day in every month till December 2015.
The banks which are not facing the problem are NRB Bank, NRB Global Bank, NRB Commercial Bank, Bank Al-Falah, Woori Bank, Habib Bank and State Bank of India.
Sonali, Janata, Agrani, Rupali, BASIC, BKB, Islami Bank Bangladesh, Prime, Eastern, DBBL, BRAC, Dhaka, The City, Social Islami, The Farmers, Meghna, IFIC, EXIM and First Security Islami are some names who are at the risk.
A BB official told New Age on Monday that the central bank was now trying heart and soul to recover the unclassified overdue loans in a bid to ensure good governance in the banking sector.
He said that the central bank might conduct special inspections in the 737 branches to find whether they perpetrated any irregularities to hide defaulted loans by placing the credit as unclassified overdue loans.
Any loan is treated as unclassified overdue if clients fail to pay his or her instalment for the loan in due time. The loan becomes a classified one if the clients do not pay any instalment for three months in a row.
BB spokesperson and executive director Subhankar Saha told New Age on Monday that the ISS cell was now observing online the financial health of branches of every bank through its system.
The central bank issued the letters to the 49 banks to recover their unclassified overdue loans as they (banks) were now at risk of facing more defaulted loans, he said.
The BB’s move came to ensure greater interest of the financial sector, Subhankar said.
Mohammad Naushad Ali Chowdhury, another executive director of the BB, said that the central bank asked the banks to reduce the unclassified overdue loans in the quickest possible time to avoid more defaulted loans.
‘The BB is now trying to maintain a tolerable limit of the defaulted loans in the banking sector by recovering the unclassified overdue loans,’ he said.