A SURGE in non-performing loans in state-run banks, already plagued by non-performing loans of about 25 per cent of the total outstanding loans, shows the failure of the authorities to go tough on loan defaulters. This also shows the futility of concessions that the authorities have earlier given to loan defaulters. Non-performing loans in the six banks soared, as Bangladesh Bank figures show, by Tk 6,805 crore in January鈥揗arch. Defaulted loans in the banks surged to Tk 85,870 crore in March, up from Tk 79,065 crore in December 2023 and Tk 60,642 crore in March 2023. Defaulted loans in the banks account for almost 60 per cent of the total default loans in the banking sector. The banks are Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Development Bank and BASIC Bank. The defaulted loans of Janata Bank skyrocketed to a record Tk 30,495 crore in March from Tk 25,009 crore in December 2023, accounting for 31 per cent of its total loan disbursement. Non-performing loans at Agrani Bank account for 28 per cent of its total disbursement while bad loans at Sonali and Rupali account for 14.84 per cent and 21 per cent of their respective loan disbursement. Non-performing loans at BASIC and Bangladesh Development Bank account for a staggering 63 per cent and 33.97 per cent of their total respective loan disbursement.
The total default loan in the banking sector was Tk 1,45,633 crore in December 2023, up from Tk 1,20,656 crore in December 2022. The amount is feared to have increased further in March. Data on the total amount of loans in default until March is, however, still unavailable. Of the total defaulted loans, 87 per cent is estimated by the central bank to have turned into bad loans and, therefore, irrecoverable. The amount of total distressed assets is believed to be as high as Tk 3,77,922 crore if the amount of rescheduled and written-off loans are included. Such a high amount of defaulted loans is believed to have happened as the borrowers took the loans using their political clout and lobbying and wilfully defaulted. The situation has exacerbated because of the failure of the authorities to go tough on the defaulters. What is also deplorable is that the authorities continue to offer one irrational concession after another. The central bank, for an example, relaxed the rules on loan classifications, allowing rescheduling on several occasions. The borrowers enjoyed relaxed repayment scopes in 2020 and 2021. In July 2022, the central bank offered another big break to loan defaulters by way of opportunities to reschedule their loans for up to 29 years and reduced the amount of the down payment to 2.5 per cent of the outstanding loan amount.
It is high time the government and the central bank improved financial management and prioritised transparency, accountability and sound management practices in the banking sector, in general, and state-owned banks, in particular. The authorities must also ensure that loans are sanctioned judiciously and loan defaulters, errant banks and officials are brought to justice.
