Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry (DCCI), has said that the rapid increase in default loans is putting additional strain on the economy.
He noted that an increase in default loans raises banks’ costs, which ultimately burdens investors and can push up interest rates. He made these remarks in an interview with Bangladesh Pratidin yesterday.
Khan explained that when default loans rise, banks must strictly enforce recovery policies, increasing operational expenses and putting pressure on lending rates. This discourages both existing and new investors from borrowing at higher rates.
He added that higher interest burdens lead businesses to reduce borrowing, which can slow investment and production, posing risks across the economy. With the economy already in a fragile state, rising default loans could worsen the situation.
Khan also pointed out that in many cases in Bangladesh, loans are deliberately defaulted, with borrowed funds not returned to banks. Recovering these funds can take years, and it is uncertain whether full recovery is possible.
He warned that without effective measures to control and recover default loans, the economy could face even greater risks.
