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Bank & Finance - October 2, 2023

Default loans reach record Tk 1.56 lakh crore

Staff Correspondent: The country’s banking sector is grappling with a historic high of Tk 156,039 crore in non-performing loans (NPLs) as of June this year, primarily attributed to the persistent issues related to corporate governance in the sector.
In the last three months leading up to June, bad loans surged by Tk 24,419 crore. According to the latest data from the Bangladesh Bank, by the end of June 2023, NPLs accounted for Tk 156,039 crore or 10.11 percent of the total disbursed loans.
The banking sector’s total outstanding loans stood at Tk 1,542,655 crore as of June 2023. This alarming rise in non-performing loans underscores the pressing challenges faced by the banking industry, signaling a need for urgent reforms and improved governance practices.
At the end of the sixth month of 2023, the NPLs stood at Tk 156,039 crore or 10.11 percent of the total disbursed loans, as per the latest data from the Bangladesh Bank.
Total outstanding loans in the banking sector stood at Tk 1,542,655 crore as of June 2023.
Experts said the default loans bring three-dimensional bad effects on the domestic economy: it creates a liquidity crisis, with banks’ money being stuck in an unproductive sector and it leads to banks charging higher interest rates for loans. Many potential investors are not getting loans from banks, due to the over-sensitivity of some bankers to the default culture, they said.
Bank officials are facing different types of official challenges in loan management, which slow down regular lending activities of a bank, the experts said adding, “The weakness of laws related to loan defaults and implementation of the laws that do exist have failed and led to the present situation.”

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