Bangladesh Bank (BB) has arranged and published different types of loan defaulted data together as per the IMF’s prescription, which economists have termed as a real picture of the distressed domestic economy.
Eminent economists told UNB that the report disclosed the real condition of the country’s banking sector, and it will help investors and depositors make their future decisions.
According to BB’s Financial Stability Report-2022, published on Sunday, the banking sector's total risky loans amounted to Tk 3.78 lakh crore last year.
The amount has been revealed by calculating the total non-performing loans (NPL), outstanding rescheduled loans and outstanding restructured written-off loans.
At the end of 2022, the banking sector's NPL stood at Tk 120,649 crore, outstanding rescheduled loans Tk 212,780 crore and outstanding written-off loans Tk 44,493 crore.
The International Monetary Fund (IMF) termed all these loans as none performing loans. The BB has published the report due to the requirement of the global lender as it fulfils the condition of $4.7 billion in loans for Bangladesh.
The IMF has conditioned its loan approval for Bangladesh to bring down the non-performing loans to 10 per cent. The IMF favours rescheduling loans and court-suspended loans as default loans.
Professor Mustafizur Rahman, a Distinguished Fellow of the Centre for Policy Dialogue (CPD), told UNB that a large amount of none performance is creating overwhelming pressure on the domestic economy as a large portion of the money is stuck in unproductive sectors.
New entrepreneurs and small and medium industries are struggling for funds, where banks can invest more money if they got the loan money back on time, he said.
He appreciated the higher recovery rate of agriculture loans, where farmers are very concerned to repay their loan money after harvesting the crops, and they do not argue or search for ways to be defaulters.
Ahsan H. Mansoor, Executive Director of research organisation Policy Research Institute (PRI) and former economist of the IMF told UNB: "Rescheduled loans are also defaulted loans as the IMF said so.”
If taken as rescheduled loans, the rate of defaulted loans in the banking sector will stand at 25 per cent while the IMF has advised keeping such loans at 10 per cent.
“I saw in the report that the rate of rescheduling is 14.4 per cent. And according to calculations given by the central bank, the average default rate is a little less than 10 per cent. Apart from this, another Tk1.0 lakh crore is stuck because of pending court cases,” he added.
According to the report of the BB, in 2022, TK65321 crore of debt has been written off from the financial report. Till 2021 it was Tk60498 crore.
Most defaulted loans were rescheduled in 2022. Tk63,719 crore was rescheduled this year, which was Tk26, 810 crore in 2021. And in 2020 it was Tk19,810 crore.
In 2019, the amount of the rescheduled loans was Tk 52,370 crore. Seventy-one per cent of the rescheduled loans are from private sector banks while 24 per cent are from public sector banks.