Defaulted loans in the banking sector increased by Tk 4,501.92 crore in the first quarter of this calendar year as borrowers did not repay instalments of their loans in due time showing excuse of political unrest, experts and Bangladesh Bank officials said. According to the BB data released on Thursday, the overall defaulted loans rose to Tk 54,657.69 crore as of March 31, 2015 from Tk 50,155.77 crore as of December 31, 2014. The defaulted loans had gone down to Tk 50,155.77 crore as of December 31, 2014 from Tk 57,290.89 crore as of September 30, of 2014 due to a central bank’s relaxed rescheduling policy. Former BB governor Salehuddin Ahmed told New Age on Thursday that some habitual defaulters had rescheduled their loans in the last quarter of 2014 using the relaxed policy of the central bank and they again entered into the defaulted zone in the first quarter of this year that fuelled the overall defaulted loans in the banking sector. The habitual defaulters usually showed excuse in the recent years that their business suffered due to political unrest, he said. He said, ‘Lack of good governance in the banking sector is another cause of the rise in the defaulted loans in the banking sector. Many bank directors are often influencing the management of the respective banks to disburse loans to their near and dear ones.’ Such borrowers failed to repay their loans, he said. Besides, some banks have recently terminated en masse jobs of their officials, creating an indiscipline situation in the banking industry, he said. The rise in the defaulted loans in the first quarter is a reflection of lack of good governance in banks, the former BB governor said. A BB official said that defaulted loans would have increased more in the first quarter of this year if the central bank did not reschedule the defaulted loans by taking lower amount of down payment avoiding the existing rules and regulations. The habitual defaulters will take the existing relaxed rescheduling policy again when they will try to take fresh loans from other banks, he said. The central bank has been continuing with the relaxed rescheduling policy since mid-December 2014 in a bid to decrease the defaulted loans artificially, he said. The defaulted loans stood at 10.47 per cent of the total outstanding loans of Tk 5,22,266.24 crore in the banking sector as of March 31, 2015. It was 9.69 per cent of the total outstanding loans of Tk 5,17,837.43 crore as of December 31, 2014. Former interim government’s finance adviser AB Mirza Azizul Islam told New Age that the country’s business had faced a dire situation between January and March of 2015 due to political turmoil. The production capacity of the real businessmen decreased significantly in the period due to a slower export growth that diminished their (businesspeople) capacity to repay the banks’ loan, he said. He noted that this was also one of cause of increasing defaulted loans in the banking sector in the first quarter of 2015. Of the total classified loans, those of five state-owned banks — Sonali, Janata, Agrani, Rupali and BASIC — stood at Tk 22,654.04 crore as of March 31, 2015 from Tk 22,763.21 crore as of December 31, 2014. The classified loans in the private commercial banks rose by Tk 4,321.20 crore as of March 31, 2015 from the end of December 2014. The total classified loans in the PCBs increased to Tk 22,747.42 crore as of March 31, 2015 from Tk 18,426.22 crore as of December 31, 2014. The classified loans in the three specialised development banks rose by Tk 157.27 crore in the period. The total classified loans in the three banks soared to Tk 7,417.07 crore as of March 31, 2015 from Tk 7,259.80 crore as of December 31, 2014. The classified loans in the nine foreign commercial banks increased by Tk 132.62 crore at the end of March 2015 from December 31, 2014. The total classified loans in the banks soared to Tk 1,839.16 crore as of March 31, 2015 from Tk 1,706.54 crore as of December 31, 2014. The BB data showed that defaulted loans at Agrani Bank increased to Tk 4,116.20 crore as of March 31, 2015 from Tk 3,706.23 crore as of December 31, 2014, that of Janata Bank to Tk 3,887.59 crore from Tk 3,286.16 crore, that of Islami Bank Bangladesh to Tk 2,802.63 crore from Tk 2,281.93 crore, and that of National Bank to Tk 1,402.04 crore from Tk 891.31 crore. 

News:New Age/15-May-2015