• 23500 crore bad loans in 31 commercial banks

• Loan disbursed violating central bank’s instruction.

• Central bank’s “early warning” in the offing.

DHAKA: The amount of bad loan in country’s commercial banks has reached in a risky point and this risk is multiplying every day.

According to authentic sources, 31 commercial banks of the country are now burdened with a huge amount of bad loan of about Taka 23500 crore with an increasing trend gradually.

Despite strict regulatory guidance from the central bank, some banks are disbursing loans indiscriminately according to their sweet will violating the central bank’s instructions, it is alleged. If this trend continues, the central bank will be compelled to impose “Early Warning” mechanism to restrict their powers and functions. Concerned banks were already informed in this regard, the sources informed.

Bangladesh Bank (BB) Governor Dr. Atiur Rahman told Banglanews24.com that the commercial banks have been instructed to recover the default loan but so far the recovery position is far from satisfaction. If any bank fails to recover the bad loan satisfactorily, strict measures will be taken against them. BB is serious to recover the bad loan because it hampers economic growth, he added.

There are some reasons for this default culture in the banking sector, mentionable, lack of adequate  security against disbursed loan, failing to select real  entrepreneurs, failing to realize loan within time frame and disbursement of loans under political influence or Bank Directors’ pressures have led the country’s banks in dire risks, it is learnt.

As the disbursed loan cannot be recovered within specified time the amount of bad loan is swelling to a critical position. Most of the banks are not obeying the instructions and warnings of the central bank to recover classified loans violating banking and company law, the source said. Critical default situation in banking sector can be described as “the ship is going to be capsized at the weight of nails”.

Loan default has increased in all types of banks. Only the specialized banks have shown slight progress in recovery. Of the total defaulted loan of Taka 23 thousand 324 crore, the nationalized banks are on top.

It is learnt that the nationalized commercial banks during last January-March period have realized only Taka 165 crore 72 lakhs against the huge classified loan of Taka 12 thousand 163 crore. The amount of classified loan during last October-December period was Taka 11 thousand 746 crore 94 lakhs.

During last three months the default loan has jumped by Taka 416 crore 46 lakh. During this time the amount of interest waived and write-off amount stand to Taka 36 crore 47 lakh and Taka 26 crore and 18 lakh respectively.  The equation of classified loan against the total loan amount 21.69 parcent. This parcentage is higher than 0.38 parcent in previous three months.

In private banks an amount of Taka 352 crore 78 laks was recovered against the bad loan of Taka 6 thousand 771 crore 25 lakhs in last three months. In previous three months the amount was Taka 6 thousand 176 crore 60 lakh. The amount of outstanding loan in last three months comparably has increased by Taka 594 crore 65 lakh.

In foreign banks, out of Taka 365 crore 87 lakh classified loan Taka 8 crore 9 thousand was realized in last three months. The amount was Taka 348 crore 62 lakh in previous three month period.

In specialized banks the amount of classified loan has decreased slightly. The bad loan amount during January- March was Taka 4 thousand 24 crore in comparison to the amount was Taka 4 thousand 124 crore in previous three month period. During this period the rate of classified loan has decreased by 96.57 parcent. So the over all defaulted amount stands stands at Taka 23 thousand 324 crore from Taka 22 thousand crore.

Such default situation in the country’s banking sector is critically ill besides repeated warnings, monitoring and punishment by the Bangladesh Bank. The banks are not following the central bank’s instructions even after actions have been taken to tame them.

The governor of Bangladesh Bank took several initiatives to motivate the bank authorities through seminars, meetings with the high ups of the banks to bring the banks acts to a system but no positive sign is visible yet. The BB governor told this correspondent that they are after making banking sector risk free and raising its standard to an international level.

A high official of BB not to be named told Banglanews24.com that in most cases of classified loan, the political leaders, concerned bank directors, managers and some central bank officials are responsible. The influential persons do not pay back huge loans while the poor farmers and small borrowers repay their loan in time, the official added.

Managing Directors (MD) of some banks alleged that the main culprits of bad loans are the bank directors who violating banking norms and company law take loans in their own name or in fake names. They do not repay the loan making the financial position of the banks risky and sick. In this way the size of the bad loan mounts to unmanageable situation, the MDs opined.

The BB governor however told this correspondent that due to our all out surveillance, close monitoring and motivational campaigns the percentage of bad loan has come down by 5 percent which is not at all satisfactory.

For different categories of bank defaulters the following systematic measures are generally taken which includes verbal intimation, serving of notice, final notice and lastly the bank file cases against the defaulter, a BB official said.   

BDST 1022 HRS, July 05, 2010