Defaulted industrial loans post 17.77pc rise in H1

The total amount of defaulted loans in the industrial sector in the July-December period was Tk 2,980.03 crore higher than that in the same period of the previous fiscal year, 2014-15, due to a dull business environment and a lack of effective loan recovery measures by the scheduled banks and the non-bank financial institutions.
According to the latest Bangladesh Bank data, the defaulted industrial loans stood at Tk 19,746.84 crore in the first half of FY2015-16, rising by 17.77 per cent from that of Tk 16,766.81 crore in the same period of FY15.
An economist and some BB officials said industrial sector faced a major setback in recent months due to political uncertainty and absence of law and orders that ultimately fuelled the defaulted loans in the sector.
‘One of the main causes of the defaulted loans rising in the industrial sector was political uncertainty and absence of law and orders,’ Former interim administration adviser Mirza Azizul Islam told New Age on Tuesday.
He said the country had witnessed a number of high-profile murders which created uncertainty in the business sector.
Mirza Azizul said some clients had taken working capital loans from the banks, but they might not have invested the funds in the areas intended for, resulting in the inflation of defaulted industrial loans in the first half of FY16.
He expressed the fear that the loan borrowers might launder the funds abroad.
A BB official told New Age on Tuesday that there were questions about the disbursement process of the 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 on bank loans, he pointed out.
The BB data, however, showed that industrial loan disbursement by banks and non-bank financial institutions increased in the first half of the FY16. Banks and NBFIs gave out Tk 1,24,026.28 crore in industrial loans in July-December of FY16 compared to Tk 1,08,784.12 crore disbursed in the same half of FY15.
The BB official said there was no reason for the amount of industrial loans to rise in the period, as the businesspeople were reluctant to expand their businesses due to the dull business environment.
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 — increased by 2.32 per cent to Tk 2,618.68 crore in the first half of FY16 from that of Tk 2,559.25 crore during the same period a financial year ago.
The defaulted loans in the SCBs increased by 26.12 per cent to Tk 6,117.42 crore in the first half of FY16 compared with that of Tk 4,850.30 crore in the same period of FY15.
Loan disbursement by three state-run specialised banks — Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, and Bangladesh Development Bank — increased by 15.86 per cent to Tk 1,738.49 crore in the first half of FY16 from that of Tk 1,500.46 crore during the same period in FY15.
Defaulted loans in the specialised banks increased by 5.59 per cent, as their non-performing loans stood at Tk 4,365.09 crore in the period, against Tk 4,133.82 crore in the corresponding period of FY15.
Industrial loan disbursement by the private commercial banks increased by 12.06 per cent to Tk 94,514.52 crore in the first half of FY16 from Tk 84,343.40 crore in the same period of FY15.
Defaulted loans in the PCBs increased to Tk 6,661.23 crore in July-December of FY16 from that of Tk 6,228.84 crore in the same six months of FY15.
The foreign commercial banks disbursed industrial loans amounting to Tk 17,609.73 crore in the first half of FY16 compared to Tk 14,972.58 crore doled out in the same period of FY15, while their defaulted loans increased to Tk 709.11 crore from Tk 577.85 crore year on year.
The NBFIs disbursed industrial loans amounting to Tk 7,544.86 crore in the first half of FY16 against Tk 5,408.43 crore disbursed in the corresponding period of FY15, while their defaulted loans climbed to Tk 1,893.99 crore from Tk 976 crore year on year.

News Courtesy: www.newagebd.net