Staff Correspondent: Commercial banks are leaning towards rescheduling after relaxation in rescheduling policy. Banks can now reschedule any defaulted loans themselves if they want. Due to this exemption, the amount of rescheduled loans is increasing abnormally. Through this, the bank can show less defaulted loans.
In the first nine months of 2023 (January-September), about Tk 19,000 crores of defaulted loans were rescheduled in the banking sector, which is 63.41 percent more than the same period of 2022. This information is known from Bangladesh Bank sources.
Sector-stakeholders blamed the central bank’s laxity as the reason for the increase in rescheduled loans. They said that before the relaxation of Bangladesh Bank, to regularize defaulted loans, 10 to 30 percent of money had to be deposited. Now it can be done by depositing 2.5 to 4.5 percent. Previously, the maximum repayment period of these loans was two years. Now taking 5 to 8 years. Apart from this, earlier, if the loans were to be regularized under special facilities, the Central Bank’s approval was required. Now that power has been handed over to the banks. Therefore, the Board has given the option to the customer to reschedule with the desired facility. Due to this, the amount of rescheduled loans has increased abnormally in the banking sector.
According to the report, during the first nine months of 2022 (January-September), defaulted loans in the banking sector were rescheduled to the tune of Tk 11,512 crore. A total of Tk 18,812 crores have been rescheduled for the same period of 2023. That is, compared to the first 9 months of 2022, the rescheduled debt increased by Tk 7,300 crore or 63.41 percent during the same period of 2023.
When asked about this, Syed Mahabubur Rahman, Managing Director of Mutual Trust Bank told that everything in the domestic and global markets has become soft. Due to being soft, the situation is getting worse everywhere. Export payments are not arriving properly in the country. Gas is not available. Again, the condition of the textile machine unit is also bad. All in all, the business situation is getting worse. So, the loan defaults regularly. Banks tend to reschedule to keep non-performing loans low.
Analysis of the report shows that among the first three quarters of last year, the April-June quarter saw the highest number of defaulted loans rescheduled. In the first quarter (January-March) rescheduling of defaulted loans was Tk 3,377 crores. Tk 10,877 crore was rescheduled in the next quarter (April-June). And July-September rescheduled Tk 4,558 crores.
Private sector banks have done the most rescheduling in the first 9 months of last year. According to the report, private banks rescheduled Tk 15,963 crore in 9 months, government banks Tk 1,434 crore, foreign banks Tk 100.20 crore and specialized banks Tk 1,315 crore.
When asked about this, Bangladesh Bank’s former governor Salehuddin Ahmed told that rescheduled loans have increased due to Bangladesh Bank’s repeated policy concessions. Rescheduled loans will increase as long as this discount policy remains. Bangladesh Bank should stop discount policy now. Besides, those banks whose rescheduled loans increase, should seek explanation from Bangladesh Bank after three months. If the explanation is not correct, action should be taken against them.
Analysis of Bangladesh Bank data showed that the rescheduling policy was relaxed on July 18, 2022. After the relaxation, in the last 15 months, defaulted loans have been rescheduled to Tk 42,131 crores. Tk 19,628 crore was made in the 15 months before the relaxation. That is, the rescheduling has increased by Tk 22,502 crores.
When asked about this, the executive director of the Policy Research Institute (PRI) Ahsan H Mansoor told that due to Bangladesh Bank’s concessions, no one would have defaulted even if the loan was not paid during the Covid period. Now that the facility is gone, the loan tends to be rescheduled to avoid default. Besides, it is rescheduling to get a new loan out of default. Hence abnormally increased rescheduled loans.
He said that after the relaxation of Bangladesh Bank policy, the banks are giving more benefits to the customers. Because the banks have full power in their hands. Bangladesh Bank does not need to take any permission in this case. If the banks’ boards were good, this problem would not have happened. Then they rescheduled after checking. The way it is being rescheduled now, it is a loss for the bank. Here the customer is getting benefits. So, Bangladesh Bank should be stricter.
Meanwhile, an interest waiver of Tk 308 crore was made in the third quarter of last year (July-September) against rescheduled loans. In the previous three months (April-June) the amount was Tk 384 crores.
According to the report of Bangladesh Bank, the total disbursed loans to the banking sector at the end of September last year was Tk 15 lakh 65 thousand 195 crores. Of this, Tk 1 lakh 55 thousand 397 crores or 9.93 percent have become defaulters. Three months ago in the June quarter, defaulted loans were Tk 1 lakh 56 thousand 40 crore. Accordingly, in the third quarter of the year (July-September), defaulted loans decreased by Tk 642 crore or 0.41 percent.
Bankers say that whatever the number of defaulted loans in the country is shown on the documents, the actual figure is almost three times higher than that. Many groups of loans are not collected but defaulted year after year. Again, the same loan is rescheduled again and again and the loan is kept regular.
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