Mahfuja Mukul: The defaulted loans of the banking sector are becoming concentrated. A few big defaulters are stuck with huge amounts of debt. Likewise, the majority of defaulted loans are in a few private banks, including the government.
The top 10 banks account for 65 percent of the total non-performing loans in the banking sector. The top 5 banks have 48 percent of total defaults. Similarly, in terms of assets, the top 5 banks have 31 percent of the total assets. Top 10 banks hold 42 percent of total assets.
These data have been obtained from the report titled ‘Financial Stability Assessment Report’ published by the Central Bank on Tuesday. The central bank prepared the report based on data till June last year. The central bank publishes such a report on the stability of the financial sector every three months. Earlier these reports were published within three months of the end of a quarter. This time it was revealed after 6 and a half months.
The report presents the overall picture of the country’s financial sector. It highlights the risks as well as the possibilities. It is said that the asset quality of banks has decreased in June compared to last March. However, the profit trend has increased. Financial institutions’ assets have increased slightly, but profits have declined. The amount of defaulted loans has increased in both banking and financial sectors.
According to the report, the impact of the global recession is becoming more evident in the country’s financial sector. Due to this, the dollar crisis increased. Imports are down. All in all, the country’s financial sector is under pressure globally.
According to the information obtained from the report, the defaulted loans in the bank sector have increased to Tk 1,560 crores till last June. Which is 10.11 percent of the total debt. Out of this, 48 percent of defaulted loans are in 5 banks. All these banks are public sector. The remaining 52 percent is in other banks. As such, almost half of the total defaulted loans are with the top 5 banks. The top 10 defaulting banks hold 65 percent of total defaults. Other banks have 35 percent. Earlier this rate was lower. At present, due to the increase in defaulted loans in some banks, on the one hand, the amount has increased. On the other hand, defaulted loans have become more concentrated.
Similarly, 31 percent of the total assets are held by the top 5 banks. The rest of the banks have 69 percent. Top 10 banks hold 45 percent of assets. Another bank has 55 percent. Only 7 banks have less than 2 percent non-performing loans. In December 2022, 10 banks had defaults of less than 2 percent. Accordingly, the defaulted loans of 3 banks have exceeded 2 percent. 4 banks have non-performing loans between more than 2 percent and less than 3 percent. In December 2022, there were 8 banks. In other words, defaulted loans have increased in 4 banks in six months. 17 banks have non-performing loans between more than 3 percent and less than 5 percent. In December 2022, there were 20 banks.
A bank is considered risky if it has more than 3 percent of non-performing loans internationally. In Bangladesh, a bank is considered risky if it has more than 5 percent of non-performing loans. According to this, 33 banks have defaulted loans of more than 5 percent. Out of 61 banks in the country, 33 banks are vulnerable due to defaulted loans. That is, more than half of the banks are on the risky list.
Meanwhile, the defaulted loans of financial institutions increased to about Tk 20 thousand crore last June. 27.65 percent of total loans are in default.
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