8 December 2018, Sat, 11:29

Default loan more than quadruples in 10 years

Default loans in the country's banking sector has increased by about four and half times in the last 10 years.

When the grand alliance government took office in 2009, it was Tk 224.81 billion, which has jumped to Tk 993.70 billion recorded in September 2018.

Besides, the banks have written off loans worth Tk 350 billion, which takes the total amount of default loan to Tk 1340 billion.

These are formal data from the Bangladesh Bank, but officials say the real amount is much higher. Many banks have failed to realise loans of big amounts, but did not term them as default loans either. Besides, the banks are being lax showing the share market issue, which is hiding the real image of the sector.

"The biggest failure of the BNP-led government was their inability to contain crimes. While the biggest failure of the Awami League regimes of the last 10 years is the collapse of the banking sector," Khondakar Ibrahim Khaled, a former deputy governor of the Bangladesh Bank who has also acted as the managing director of four commercial banks in his career spanning four decades, told Prothom Alo.

"The central bank did not have the power to control the state-owned banks, which let criminals embezzle public money. The problem with the central bank is that they do not have the courage to act. We only have formal data about default loans, the reality is even bleaker," he observed.

The Hall-Mark scam at the Sonali Bank was the biggest in the last 10 years while BASIC Bank, Farmers Bank, Janata Bnk, Agrani Bank and Rupali Bank also contributed to the downfall.

As per BB data, at the end of last September, the total amount of loan in the banking sector was Tk 8680 billion, of which Tk 993.7 billion were default loans.

In last June, it was Tk 893.40 billion, meaning in the last three months default loan has increased by 103 billion. In the first nine months of the year 2019, default loan increased by 250.67 billion.
The six state-owned banks have default loans of Tk 480 billion, which is 31.23 per cent of the loan.

BB executive director and spokesperson Sirajul Islam said default loans usually increase every quarter, which has been the case in this quarter as well. "But the thanks have been asked to realise the default loans and hopefully it will go down by the end of December," he added.
Former director general of Bangladesh Institute of Bank Management Moinul Islam said, "To realise default loans the government has to set examples by confiscating assets of the defaulters, at home and abroad. In reality, it only depends on the government's will. But its people, the politicians and the businessmen, are looting the money and shipping them abroad. They will never repay the banks."