Banks facing historic high default loans

Increased by Tk 26,000cr in a year

Mahfuja Mukul: The period of discount given to businessmen in repayment of bank loans has not yet fully expired. In this, the customer is exempted from defaulting even without paying the loan installments. However, the amount of defaulted loans of the banking sector is increasing at an alarming rate.
At the end of June this year, the amount of defaulted loans in the banking sector stood at Tk1 lakh 25 thousand 257 crore. In the same period last year (June 2021), the amount of default was Tk 99 thousand 205 crore. As a result, defaults increased by Tk 26 thousand 52 crores within one year.
This information is known according to the latest report of Bangladesh Bank yesterday.
According to banking sector stakeholders, the facility of non-repayment of loans by Bangladesh Bank has made the customers reluctant to repay the loans. The effect will be in the long term, the more severe the defaulted loans.
According to the data of the Central Bank, the total disbursed loans of the banking sector at the end of the June quarter of the current year 2022 stood at Tk 13 lakh 98 thousand 592 crore. Out of this defaulted loan is Tk 1 lakh 25 thousand 257 crore.
Which is 8.96 percent of the total disbursed loans. Three months ago, at the end of March, the default was Tk 1 lakh 13 thousand 440 crore. According to that, defaults increased by Tk 11 thousand 817 crore in three months.
Earlier, the default loan at the end of June 2021 quarter was Tk 99 thousand 205 crore. According to that, defaults increased by Tk 26 thousand 52 crore in one year. This is the highest defaulted loan in the country’s history.
According to the data of Bangladesh Bank, the amount of defaults of state-owned banks stands at Tk 55 thousand 429 crores. 44% of the total defaults are of six state-owned banks. The defaults of private banks are Tk 62 thousand 678 crore, which is about 50 percent of the total defaulted loans of the banking sector. Apart from this, defaults of foreign banks are Tk 2 thousand 957 crore and specialized banks stand at Tk 4 thousand 194 crore.
In this regard, the former governor of Bangladesh Bank and economist Dr. Saleh Uddin Ahmed said that many wrong decisions are coming from the central bank in recent times. The policies coming from there are further encouraging the defaulters. On the contrary, good customers of the bank are discouraged. Banks are also reluctant to recover defaulted loans. For this they do not have to answer to the central bank.
The former governor of Bangladesh Bank said that it is not the job of any central bank to make a sudden decision. Central bank policies must be long-lasting and sound. So that defaulted loans, refinances, provision deficits come down. A banking commission should be constituted to solve these problems. Even before this, the default problem has been resolved through the Banking Commission.