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Download PDF The volume of defaulted loans in the banking system rose by 14.78 percent to stand at Tk 20,098 crore in December 2006 from Tk 17,509 crore in December 2005.
The total increase in defaulted loans is Tk 2,589 crore. The amount of defaulted loans in national commercial banks (NCB) increased 15 percent or Tk 1,479 crore while private commercial banks (PCBs) saw an increase of 23 percent or Tk 822 crore, recent statistics of the Bangladesh Bank show.
Defaulted loans in development financial institutions (DFIs) rose by Tk 308 crore or 8 percent. Only foreign commercial banks (FCBs) managed to reduce loan default, bringing it down by 19 percent or Tk 20 crore.
Out of the four NCBs — Sonali, Janata and Rupali — saw rise in loan defaults, while Agrani Bank managed to curb it.
Sonali Bank sources said the bank was forced to lend money to prioritised sectors marked by the government and those loans could not be recovered on time.
Janata Bank sources said the bank could not recover a number of new loans that had been sanctioned due to political interference in the bank’s affairs.
The government plans to sell its stake in Rupali Bank the loan portfolio of which had been marked as classified in accordance with international standards increasing the amount of its defaulted loans from Tk 750 crore to Tk 1,135 crore within a year.
Bangladesh Bank (BB) sources said defaulted loans in NCBs will be reduced because of a government plan of corporatising those banks, a move which will significantly prevent government interference in the banks’ affairs as they will be run by autonomous bodies.
Among the PCBs, with the exception of the problem ridden Oriental Bank and Bangladesh Commerce Bank Ltd (BCBL), defaulted loans in all the others remained below ten percent of their outstanding loans.
Defaulted loans in most of the 30 PCBs stand between .15 percent and 4 percent of their outstanding loans.
But, 59.27 percent of Oriental Bank’s outstanding loans are classified, while the percentage is 35 in the case of BCBL.
The central bank data also reveal that Oriental Bank broke all records of commercial banks when its classified loans rose to 48.09 percent in June last year compared to 24.4 percent in December 2005.
“The percentage of classified loans has increased dramatically after the central bank took over Oriental’s charge as the problem bank’s past management had shown many classified loans as good loans,” said a source in the banking sector. “The central bank revealed the camouflaged defaulted loans and so the figure has increased to a record point,” the source added.
Out of the total amount of Tk 1,52,857 crore in outstanding loans in the banking system, the amount of classified loans was Tk 20,098 crore or 13.15 percent on December 31, 2006 compared to 13.55 percent or Tk 17,509 crore on December 31, 2005, sources said.
Classified loans in NCBs amounted to Tk 11,503 crore or 22.94 percent of their outstanding loans in December 2006 which had been Tk 10,024 crore or 21.35 percent in December 2005.
Defaulted loans in PCBs amounted to Tk 4,365 crore or 5.45 percent of their outstanding loans in December ‘06, which had been Tk 3,543 crore or 5.62 percent in December ‘05.
Classified loans in DFIs amounted to Tk 4,144 crore or 33.68 percent of their outstanding loans in December ‘06, which had been Tk 3,836 crore or 34.87 percent six months before.
Defaulted loans in FCBs came down to Tk 83 crore or .81 percent of their outstanding loans in December last year which had been Tk 104 crore or 1.26 percent in December, 2005 .
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