Industrial defaulted loans shoot up to Tk 20,302cr in Q1 [ Tritiyo Matra News ]

Industrial defaulted loans shoot up to Tk 20,302cr in Q1

Local December 22, 2015

The defaulted loans in the industrial sector skyrocketed by Tk 1,694.06 crore in the first quarter of this financial year compared with that of the same period of the FY 2014-15 due to political uncertainty and lack of effective loan recovery measures from banks.
According to the latest Bangladesh Bank data, the defaulted industrial loans stood at Tk 20,302.39 crore in the July-September period of the FY16, rising by 9.10 per cent from that of Tk 18,608.33 crore in the same period of the FY15.
An economist and BB officials said the industrial sector faced a major setback in recent months due to political uncertainty that fuelled the defaulted loans in the sector.
Besides, indiscriminate loan disbursement by banks also resulted in soaring defaulted credit in the industrial sector, they said.
‘One of the main causes of the rise in the defaulted loans in the industrial sector in the first quarter of the FY16 was political uncertainty,’ former BB governor Salehuddin Ahmed told New Age on Monday.
The country had witnessed political unrest in the last financial year that ultimately put an adverse impact on the industrial loan situation, he said.
Due to the political instability, a good number of businessmen failed to repay instalments of their loans in due time, raising the classified loans, Salehuddin said.
Besides, entrepreneurs were also reluctant to make fresh investment in the period, he said.
Some loan defaulters recently enjoyed easy rescheduling policy on special consideration due to the central bank’s relaxed stance that ultimately put a negative impact on the industrial credit disbursement, he said.
The BB has recently restructured a number of large loans taken by corporate groups that has encouraged the habitual defaulters, the former BB governor said.
Besides, banks’ failure in taking effective measures to recover defaulted loans worsened the defaulted industrial loan situation, he said.
A BB official told New Age on Monday that there were questions about the disbursement process of bank loans.
Due to an increase in non-performing loans, banks’ financial health will be vulnerable and will weaken their corporate governance, he said.
Moreover, the defaulted loans play a significant role in increasing the interest rate of bank loans, he said.
The BB data, however, showed that industrial loan disbursement by banks and non-bank financial institutions increased slightly in the first quarter of the FY16.
Banks and NBFIs disbursed industrial loans amounting to Tk 53,984.70 crore in the first quarter of the FY16 against Tk 52,044.29 crore in the July-September period of the FY15.
The BB official said that there was no reason for the rise in the industrial loans in the period as the businesspeople were reluctant to expand their business due to the political unrest.
He said, ‘To get more loans, the businesspeople convinced the banks that their previous loans would be defaulted due to the sluggish business if fresh loans were not disbursed to them.’
Industrial loan disbursement by five state-owned commercial banks — Sonali, Janata, Agrani, Rupali and BASIC — decreased by 11.38 per cent to Tk 1,126.22 crore in the first three months of the FY16 from that of Tk 1,270.87 crore during the same period a financial year ago.
The defaulted loans in the SCBs also decreased by 2.28 per cent to Tk 4,997.75 crore in the first quarter of the FY16 compared with that of Tk 5,114.13 crore in the same period of the FY15.
Loan disbursement by three state-run specialised banks — Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Bangladesh Development Bank — increased by 23.52 per cent to Tk 817.08 crore in the first three months of the FY16 from that of Tk 661.51 crore during the same period a financial year ago.
Defaulted loans in the specialised banks increased by 18.87 per cent as their non-performing loans stood at Tk 3,901.07 crore in the period against Tk 3,281.93 crore in the corresponding period of the FY15.
Industrial loan disbursement by the private commercial banks increased by 2.77 per cent to Tk 40,589.01 crore in the first three months of the FY16 against Tk 39,496.19 crore in the same period of the FY15.
Defaulted loans in the PCBs decreased to Tk 8,136.81 crore in the first quarter of the FY16 from that of Tk 8,353.61 crore in the first three months of the FY15.
The foreign commercial banks disbursed industrial loans amounting to Tk 7,860.10 crore in the first quarter of the FY16 against Tk 7,682.03 crore in the same period of the FY15 while their defaulted loans increased to Tk 767.83 crore from Tk 667.53 crore.
The NBFIs disbursed industrial loans amounting to Tk 3,592.29 crore in the first quarter of the FY16 against Tk 2,933.69 crore in the same period of the FY15 while their defaulted loans increased to Tk 2,498.93 crore from Tk 1,191.13 crore.