Default loans in banks grow further in third quarter of FY23

The default loans stood at over Tk 1.31 trillion at the end of March, 16 percent more than what it was a year ago

Sheikh Abu Talebbdnews24.com
Published : 28 May 2023, 06:27 PM
Updated : 28 May 2023, 06:27 PM

The growing default loans in Bangladesh’s banks have swelled further, by 16 percent in a year to stand at over Tk 1.31 trillion at the end of March.

In the January-March period, bad debts worth around Tk 110 billion were added to the total, which was 9 percent more than the previous quarter, latest data from the Bangladesh Bank showed on Sunday.

The total default loans were 8.80 percent of the nearly Tk 15 trillion loans disbursed by the banks, up from 8.43 percent a year ago.

Sarwar Hossain, a spokesman for the central bank, said the default loans grew because it found more bad debts during inspections after December while interests on the old default loans were added to the total.

Although the Bangladesh Bank gave businesses different types of facilities and waivers, the size of default loans has been ballooning.

Along with bad debts, written-off loans also increased to cross Tk 440 billion at the end of January.

Professor Selim Raihan, executive director at the South Asian Network for Economic Modeling, said the total default loans would have been more than Tk 2 trillion if the rescheduled loans and those stayed by the High Court were counted.

He said the central bank does not have the ability to control default loans alone, blaming a lack of action against businesses who do not repay loans. “The government needs to show the courage of taking steps against businesses who enjoy abnormal facilities.”

AB Mirza Azizul Islam, a former advisor to a caretaker government, said the crisis in the banking sector has lingered on because the government awarded loan defaulters instead of acting against them.

“If the waivers and other facilities continue, the defaulters will naturally keep wanting more.”

Former governor Saleh Uddin Ahmed said the central bank should be aggressive in reducing bad debts with action such as banning the loan defaulters from travelling by air or purchasing cars.