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Download PDF Defaulted loans in the banking sector increased by 13 percent due to sluggish economy and loans disbursed on political consideration during the last government.
According to Bangladesh Bank (BB) statistics, the loans defaulted till December 31, 2007, totalled Tk 22,624 crore, upped by Tk 2,526 crore from the previous year. Of the increase, the four state-owned banks alone accounted for Tk 2,288 crore.
“A number of big businesses began defaulting on their loans in the wake of anti-graft drives last year,” said a top official of a state-owned bank, requesting not to be named.
Khondkar Ibrahim Khaled, former deputy governor of the Bangladesh Bank, however described the scare factor as minor. He said, “Many people couldn’t continue paying off the debts mainly because of stagnation in business activities.
“Besides, most of the loans disbursed on political consideration in the last months of four-party alliance have turned bad.
This is also the reason why most the loans defaulted last year was with the state-owned banks.”
Of the government-run banks, increase in defaulted loans was Tk 977 crore in Sonali Bank, Tk 220 crore in Janata Bank, Tk 397 crore in Agrani Bank and Tk 694 crore in Rupali Bank.
Officials of Janata Bank said at least six business houses have become defaulter because of anti-corruption drives. Similar were the views of Sonali Bank officials.
Rupali Bank officials said their overall activities including loan recovery were very slow because of lingering privatisation process.
Up to December 31, 2007, 40 percent of their outstanding loans was defaulted, compared to 23 percent in the previous year.
According to the central bank, the increase in defaulted loans was Tk 556 crore in the private commercial banks and Tk 111 crore in the foreign commercial banks.
However, defaulted loans in the specialised banks marked a decrease of Tk 428 crore.
Out of Tk 1,71,044 crore in outstanding loans in the banking system, the volume of classified loans was Tk 22,624 crore or 13.23 percent on December 31, 2007, compared to Tk 20,098 crore or 13.15 percent on December 31, 2006, the sources said.
Classified loans in state-owned banks stood at Tk 13,791 crore or 29.27 percent of outstanding loans on December 31, 2007, which had been Tk 11,503 crore or 22.94 percent on December 31, 2006.
Defaulted loans in private commercial banks added up to Tk 4,921 crore or 5.01 percent of outstanding loans in December 2007, which had been Tk 4,365 crore or 5.45 percent in December 2006.
Classified loans in specialised banks stood at Tk 3,716 crore or 28.58 percent of outstanding loans in December ‘07, compared to Tk 4,144 crore or 33.68 percent in December 2006.
The amount of loans shirked in foreign commercial banks was Tk 194 crore or 1.43 percent of outstanding loans in December last year against Tk 83 crore or 0.81 percent in December 2006.
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