Banks rescheduled Tk 7,355 crore in defaulted loans during July-September period of 2024, with 99 per cent of the rescheduling done by private banks as the Bangladesh Bank chose to retain the previous government鈥檚 lenient rescheduling policy.
The Awami League government collapsed on August 5, 2024 amid a student-led uprising that began in early July. However, the loan rescheduling policy, introduced by the previous administration to shield defaulters, remains unchanged.
The new Bangladesh Bank governor Ahsan H Mansur, once a strong critic of such lenient policies, has left them unchanged.
This policy has discouraged capable borrowers from making timely payments, as defaulters continue to benefit from easy restructuring.
Of the total Tk 7,355 crore rescheduled in the quarter, private banks accounted for Tk 7,271 crore, state-run banks Tk 56.87 crore and specialised banks Tk 27.19 crore, according to Bangladesh Bank data.
Between January and September of 2024, banks rescheduled Tk 20,732 crore in total, with private banks accounting for Tk 17,962 crore, state-run banks Tk 1,650 crore and specialised banks Tk 1,120 crore.
Since September 2022, banks have had the authority to reschedule loans at will, leading to a surge in rescheduling, now averaging Tk 5,500 crore per quarter, up from that of Tk 2,000-3,000 crore earlier.
Borrowers now negotiate rescheduling directly with banks instead of seeking central bank approval.
According to the latest updated report of the central bank, the country鈥檚 total non-performing loans shot up by more than Tk 1 lakh crore to Tk 2,84,977 crore in September 2024 from Tk 1,82,295 crore at the end of March 2024.
About 17 per cent of total bank loans 鈥� amounting to Tk 16.82 lakh crore 鈥� are classified as non-performing, the highest ratio in South Asia.
Zahid Hussain, former lead economist at the World Bank鈥檚 Dhaka office, told 抖阴精品 that the rescheduling policy was excessively generous and was not even enforced by the previous government properly.
He emphasised the need for stricter regulations, including higher down payments aligned with international best practices and curbing repeated rescheduling.
Zahid noted that potential malpractices could not be assessed based on July-September data, as the new government was still stabilising. He suggested monitoring October-December data to determine whether banks and businesses are exploiting the existing generous policy.
Distressed assets in the banking sector reached nearly Tk 5.5 lakh crore by the end of 2023, driven by unchecked loan irregularities and weak regulatory enforcement.
Bangladesh Bank鈥檚 Financial Stability Report 2023 revealed that defaulted loans stood at Tk 1,45,633 crore, rescheduled loans at Tk 2,88,540 crore, write-offs at Tk 53,612 crore and Tk 60,000 crore remained unclassified due to court-issued stay orders.
The further relaxation of rescheduling rules ahead of the January 2024 national election allowed banks to restructure loans with minimal down payments and extended repayment periods, primarily benefiting large businesses looking to clear their default status, financial experts said.
Loan rescheduling soared to Tk 91,221 crore in a year in 2023, a 360-per cent increase from Tk 19,810 crore in 2020.
The BB circular enabled repeated rescheduling with down payments as low as 2.5 per cent and allowed defaulters to extend repayment terms up to 29 years.
Many businesses exploited this policy, particularly those aiming to participate in the national election, which bars defaulters from contesting, experts said.
Instead of enforcing discipline, the central bank continues to facilitate defaulters, leaving banks burdened with bad loans, they said.
