The pressure of defaulted loans in the country's banking sector has reached a terrifying level. Till September this year, 35.73 percent of the loans disbursed have become defaulted, which is the highest rate since 2000.
As a result, new concerns have arisen about the stability and financial governance of the banking sector. According to the latest quarterly report of Bangladesh Bank, the defaulted loan rate was only 16.93 percent during the same period last year. That is, the default rate has more than doubled in a span of one year. At the end of September 2024, defaults were Tk 2 lakh 85 thousand crore. At the end of September this year, total loans and advances stood at Tk 18 lakh 3 thousand 839 crore. Of this, Tk 6 lakh 44 thousand 515 crore is classified as defaulted, which is about 36 percent of the total loan. In June, the amount of defaulted loans was Tk 6 lakh 8 thousand 345 crore. In just three months, defaulted loans increased by Tk 36 thousand 169 crore.
The report said that the actual amount of defaulted loans is Tk 415,805 crore, which is 26.40 percent of the total actual loans disbursed. The actual amount of disbursed till the same period stood at Tk 15,75,129 crore. Although loan disbursement increased by Tk 26,739 crore, defaults increased by Tk 27,438 crore.
According to Bangladesh Bank, the total 'distressed assets' including defaulted loans, write-offs, rescheduled loans, and loans pending in court may soon exceed Tk 10 lakh crore. At the end of September, the amount of deferred interest stood at Tk 98,343 crore.
The highest defaulted loan rate in the banking sector was 41.1 percent in 1999. Then it decreased to 6.1 percent in 2011. But in the next decade, defaulted loans have returned to an upward trend and have now reached a dangerous level.
Bangladesh Bank spokesperson Shahriar Siddiqui told The Bangladesh Pratidin on Wednesday, “The amount of defaulted loans has increased due to the re-evaluation of the assets of commercial banks in Bangladesh. The real picture of defaulters has emerged due to the forensic audit following the international norms of loan defaulters. Banks are unable to make new investments as they are unable to recover defaulted loans.”
The quarterly report shows that the required provision was Tk 4,74,597 crore at the end of September this year. But the banks were able to save only Tk 1,30,366 crore. As a result, the provision deficit stood at Tk 3,44,231 crore, which has increased the risk of the banking sector by another 1.32 percent.
(Translated by Lutful Hoque)
