Home ›› 03 Dec 2021 ›› Back
Like government banks, default loans are also rising in private ones, with the amount increasing by Tk 1,552 crore at the end of the third quarter of this year.
The amount of default loans in private banks at the end of the second quarter was Tk 49,191 crore, which rose to Tk 50,743 crore at the end of the third quarter, data from the Bangladesh Bank shows.
Default loans in 42 private commercial banks amounted to Tk 50,743 crore, and five of them held Tk 19,213 crore, which was 38.51 per cent of the total default loans in private banks. The five banks are AB Bank, National Bank, Islami Bank, Padma Bank, and One Bank.
Of them, AB Bank held the highest amount of default loans. At the end of September, its default loan was Tk 5,333 crore, which was 18.74 per cent of its total debt. National Bank came next, with its default loan reaching Tk 4,592 crore, which was 10.67 per cent of its total loan.
Islami Bank held the third highest amount of default loans. Its default loan stood at Tk 3,655 crore, which was 3.33 per cent of its total loan.
Padma Bank’s default loan was Tk 3,586 crore, which was 62.39 per cent of its total loan. One Bank’s default loan was Tk 2,047 crore, which was 9.24 per cent of its total debt.
Experts say state-owned banks are facing a crisis as influential quarters continue to plunder money from those, and these people now have their focus on private banks.
Dr Salehuddin Ahmed, former governor of the central bank, said what had happened to state-owned banks had now spread to private ones as well.
“Private banks may have to be saved with subsidies from the budget if this continues for a while,” he said.
He also said the coronavirus pandemic had affected many businessmen, but the impact would be felt later.
“If these are calculated, the amount of default loans will increase further in the future,” he added.
Bankers say the pandemic has affected many business owners in various ways, who are now unable to repay loans.
Besides, many businessmen with a good credit history have forgotten to repay loans even after getting various benefits, causing default loans to rise.
Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank, told The Business Post many businessmen had not yet turned around because of the pandemic impacts.
“But many clients were delaying repayments even before the pandemic, and their information was sent to the central bank. That is why default loans in private banks have increased as well,” said Mahbubur, also the former president of the Association of Bankers, Bangladesh.
Ali Reza Iftekhar, managing director of Eastern Bank and president of the Association of Bankers, Bangladesh, told a programme recently non-performing loans in banks had become like cancer. He said banks would have to find a way to reduce default loans. “The risk management departments of banks have to be allowed to work independently.”
Iftekhar also said a key reason why default loan is so low in developed countries is that the risk management departments of their banks are very strong.
Default loan in the banking sector now stands at Tk 1,01,150 crore.
Of this, government banks hold Tk 47,715 crore, private ones Tk 50,743 crore, and foreign ones Tk 2,692 crore.
