Although the disbursement of loans in the banking sector has increased due to an improved pandemic situation, the amount of defaulted loans has not decreased.In three months, the defaulted loans in the banking sector have increased by about Tk 2,000 crore.
At the end of June this year, the amount of defaulted loans was Tk99,205 crore while at the end of September, it jumped to Tk1,01,150 crore, which is 8.17% of the total loan disbursed. However, unofficial sources have informed that there are defaulted loans of over 2 trillion taka.
A deputy governor of Bangladesh Bank told journalists that the disbursement of loans in the banking sector was somewhat sluggish earlier this year due to the pandemic.
He said, "As the situation is normal now, the demand for loans has increased in all sectors. This has increased the amount of total loans in the banking sector."
He further said that the increase in the amount of loans has reduced the percentage of defaulted loans as compared to the previous quarter. But defaulted loans are comparatively on the rise. Due to the relaxation of various conditions by Bangladesh Bank to cope with the economic impact of the Covid 19 pandemic, no one defaulted last year even though they did not repay the loan. But no such facility was provided this year.
The central bank has instructed that no one will be in default this year, if 25% of all types of loans are paid. In the first nine months of this year, the defaulted loans of the banking sector have increased by Tk12,416 crore. At the end of December last year, it was Tk88,734 crore. At that time, defaulted loans were 7.66% of the total loans.
The central bank's executive director Sirajul Islam said the amount of defaulted loans have mounted slightly due to the increase in the amount of loans. However, defaulted loans have not increased much. In September, it is difficult to say whether the defaulted loans will decrease or increase; but it seems that the defaulted loans will decrease by the end of December, Sirajul Islam remarked. He said, "It is difficult to say whether the defaulted loans will decrease or not, but it seems that the defaulted loans of the banks will come down by the end of December."
It is to be noted that defaulted traders who rescheduled their loans in 2019 on the assurance of one-time exit, Bangladesh Bank has given new time to them. They will have the opportunity to repay the loan by next December. By this time, they will not be defaulters.
Former governor of the central bank Saleh Uddin Ahmed told reporters, "Non-performing loans (NPLs) are on the rise in the banking sector due to lack of monitoring of the banks' board of directors and the central bank. There is political involvement in disbursement of all the big loans; so, even if they become defaulters, they do not care, because the court is not able to take steps to recover the loans."
He further said that the loan defaulters are waiting for various packages and facilities of the central bank. The central bank has provided various facilities during the pandemic. This year, some of those facilities have been withdrawn. But the defaulters think that if they do not repay the loan, the central bank will provide more benefits.
Former adviser to caretaker government Dr. Wahid Uddin Mahmud said, "The authorities concerned should work hard to constitute good governance and accountability in the banking sector. At the same time it is essential to keep banks away from political influence."
President of Bangladesh Economics Association Professor Dr. Abul Barkat said, "The central bank and other regulatory institutions should carry out firm and uncompromising drive to recover defaulted loans to sustain the country's banking sector."
Dr. Zahid Hussain, former lead economist of World Bank, Dhaka Office said, "The regulatory authorities should not compromise with any bank or financial institution in case of graft and anomalies."