BIBM chief says loan defaults at 'alarming' levels in Bangladesh

The director general of the Bangladesh Institute of Bank Management or BIBM has said the defaulted loan situation in Bangladesh has hit 'alarming' levels.

"In terms of percentage, it has crossed double digit. In 2015, the amount of defaulted loan was below 9 percent of the total disbursement but in 2016, it has exceeded 10 percent," Toufic Ahmad Choudhury said on Sunday.

He was speaking at the inauguration of the two-day annual banking conference at the BIMM auditorium in the capital.

"It's a matter of grave concern for the banking sector in the country," he said in the presence of Bangladesh Bank Governor Fazle Kabir who was the chief guest.

Kabir, however, did not say anything about loans not being paid back. He only asked the bank officials to exchange knowledge among themselves.

"Currently, the amount of defaulted bank loan stands at Tk 1.25 trillion. Of this amount, Tk 800 billion is recoverable while Tk 450 billion is bad loan which has either no chance of recovery or being written off," Toufic added.

He, however, added there was 13 percent growth in the banking sector so the banks managed to absorb such huge burden of defaulted loan.

Financial Institutions Secretary Md Eunusur Rahman also expressed concern over the defaulted loan crossing 10 percent of total credit.

Eunusur recently said at a programme that a huge amount of money was lying with the 20 top loan defaulters.

"Of the total defaulted loan from Janata Bank, 40 percent is with 20 defaulters. The 20 top defaulters are responsible for 51 defaulted loans of Rupali Bank," he said adding "32.4 percent defaulted loans of Sonali Bank is with its 20 top defaulters."

Finance Minister AMA Muhith held the bankers responsible for such a huge amount of unpaid loans at a recent programme.

"The way they approve the loans, the borrowers are destined to fail and become defaulters," Muhith had alleged.

The BIBM director general said on Sunday the amount of defaulted loans in the small and medium enterprises or SME sector was also on the rise.

He identified poor management, lack of skill and weaknesses in loan management system as the culprits.