Due to the non-payment of loans by one type of borrowers, the percentage of defaulted loans increased by 16.83% during last one year, which is amounted to Tk 1,20, 656 crore.
Prior to that year, up to December of 2021, the amount of defaulted loans was Tk 1, 03, 274 crore. All these information was revealed in the report of Bangladesh bank over defaulted loans published on Sunday.
BB made its principles of loan-repayment flexible amid the aftermath of Covid-19 crisis. As a result, the borrower got rid of becoming loan-defaulter without paying the loan-installments. The flexibility also extended to 2021 and 2022. The central bank also made the rules of loan rescheduling easier and the responsibility of rescheduling was on the banks. However, the loan-default increased even after the flexibilities given in loan repayment.
The BB report stated the amount of disbursed loan of 61 registered banks up to December 31 2022 was Tk 14,77,778,76,00,000, among what the classified loan was Tk 1,20,566 crore and 54 lakh. At the end of 2021, the amount of defaulted loan was Tk 1,03,274 crore and then the defaulted loan increased to 16.83%.
According to the report, in comparison to July to September quarter of 2022, the defaulted loan was decreased to 1.20% in October to December quarter. At September 30, the amount of disbursed loan of 60 banks was Tk 14, 36, 199 crore and 82 lakh, among what the defaulted loan was Tk 1, 34,396 crore and 11 lakh. On that period, the gross percentage of defaulted loan was 9.36%. However, compared to previous three months, the gross percentage of defaulted loan at the end of December 2021 was 7.93%. That means the gross percentage of defaulted loan at the end of December 2022 increased by 0.43% compared to December 2021.
On the condition of remaining anonymous, a director of Bangladesh Bank on Sunday told The Bangladesh Pratidin, “Some banks faces loan-crisis last year, which contributes to increase in defaulted loan in overall banking sector. However, the amount of defaulted loan in last quarter of previous year was reduced by 10.2% compared to the previous quarter.”
“The banks try to recover the defaulted loans at the last quarter of each year to increase profit. As a result, traditionally, some banks show rescheduled amount of defaulted loans in their financial statement. Hence, at the end of the year the amount of defaulted loans is reduced and the same thing has been reflected in the defaulted loan scenario of last year,” he added.
According to the report of BB, at the end of December 2022, the provision deficit of the banks is amounted to Tk 11,009 crore. It was mandatory to preserve provision of 84, 157 crore and 33 lakh, however the real amount of provision preserved was Tk 73,148 crore.
In response to a question over the matter, BB executive director and spokesperson, Mejbaul Haque, on Sunday told The Bangladesh Pratidin, “We’ve taken various initiatives and issued several rules for recovering defaulted loans. We also provided directions for rescheduling. The loans could be updated and recovered by paying down payment of 5%.”
He said, “Because of these directives, the amount of defaulted loan in October-December quarter was reduced compared to July-September quarter. The rules was— if anyone become defaulter, he don’t get further loan from anywhere. However, the central bank made the terms and conditions of loan rescheduling easier last July. The defaulted term loans can now have their loans rescheduled in 5 to 8 years rather than previous duration of 9 months to 24 months. Besides, for rescheduling of loans, they’ll have the chance to pay 2.5 % to 4% of defaulted loans, which was 10% to 30% earlier. Before July, it was mandatory to reschedule the loan by paying off 30% of the defaulted loan at a time. In many cases, the defaulters used to reschedule the loans by paying off less than the mandatory amount upon taking approval from BB. Some borrowers don’t pay off loan intentionally and take new loans from more than one bank. However, they don’t pay off it later on, which increases the defaulted loans in banking sector.
@The report was published in Bengali on print and online versions of The Bangladesh Pratidin on February 20 and rewritten in English by Lutful Hoque
