Defaulted loans up by Tk 1,215cr in ’15 despite large loans’ restructuring [ Tritiyo Matra News ]

Defaulted loans up by Tk 1,215cr in ’15 despite large loans’ restructuring

Local February 16, 2016

Defaulted loans or non-performing loans in the banking sector rose by Tk 1,215.45 crore in 2015 although Bangladesh Bank allowed restructuring of a huge amount of large loans of different corporate groups in the year.
According to the BB data released on Monday, overall defaulted loans stood at Tk 51,371.22 crore as of December 31, 2015 rising from Tk 50,155.77 crore as of December 31, 2014.
Officials of BB said that the amount of defaulted loans would have been higher in 2015 if the BB had not taken a soft policy on large loan restructuring for corporate groups, mostly linked to ruling party.
The defaulted loans increased by over Tk 9,000 crore in 2014.
Overall defaulted loans had gone up to Tk 54,708.28 crore as of September 30, 2015 before declining by 6.09 per cent, or Tk 3,337.06 crore in three months till December 31, 2015 due to the central bank’s soft stance.
A number of banks including state-run Janata restructured around Tk 15,000 crore in loans of several corporate groups, including Beximco, on easy terms in the second half of 2015, said BB officials.
Besides, the BB allowed the banks to reschedule defaulted loans avoiding rules and regulations to show that the non-performing loans have decreased, they said.
Former interim government’s finance adviser AB Mirza Azizul Islam told New Age on Monday that the opportunity given by the central bank to restructure large loans would encourage habitual loan defaulters. ‘The defaulters will want the same facility again as they got the scope once,’ he said.
He said that despite the wholesale restructuring of large loans the existing ratio of non-performing loans against the outstanding disbursed loans was still very high.
The defaulted loans stood at 8.79 per cent of the total outstanding loans of Tk 5,84,615.49 crore in the banking sector as of December 31, 2015. The amount of defaulted loans was 9.69 per cent of the total outstanding loans of Tk 5,17,837.43 crore as of December 31, 2014.
He said that the banks should be aware about the recovering capacity of the clients before disbursing the loans to them.
Of the total defaulted loans in 2015, those of six state-owned banks — Sonali, Janata, Agrani, Rupali, BASIC and Bangladesh Development Bank — increased by Tk 981.74 crore to Tk 23,744.95 crore in 2015 from Tk 22,763.21 crore in 2014.
The non-performing loans in the private commercial banks rose by Tk 2,334.33 crore to Tk 20,760.55 crore in 2015 from Tk 18,426.22 crore in 2014.
The defaulted loans in the two specialised development banks — Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank — dropped to Tk 4,968.71 crore in 2015 from Tk 7,259.80 crore in 2014.
The defaulted loans in the nine foreign commercial banks increased to Tk 1,897.01 crore in 2015 from Tk 1,706.54 crore in 2014.
BB deputy governor SK Sur Chowdhury told New Age on Monday that the defaulted loans in the last quarter decreased as banks usually gave special drive to recover their defaulted loans.
The rescheduling of the defaulted loans also put positive impact, he said.
Besides, the central bank strengthened its monitoring and supervision of the banking sector which stopped the fund diversion to another sector, he said.