Home ›› 14 Nov 2021 ›› Front
Default loans at non-bank financial institutions (NBFIs) rose 16 per cent year-on-year in June this year, riding on massive irregularities and scams.
Non-performing loans (NPLs) at 34 NBFIs stood at Tk 10,328 crore at the end of June. It was 15.38 per cent of the total outstanding loans in the sector which is Tk 67,114 crore, the latest Bangladesh Bank (BB) data show.
Defaulted loans fell only Tk 25 crore in the April-June quarter.
A senior BB official said bad loans in the NBFIs sector kept accumulating because of massive irregularities and scams.
He said only five to six NBFIs out of 34 are doing well. Industry insiders said that the NPLs slightly fell in June quarter thanks to BB’s loan moratorium facility.
On March 24 last year, BB asked NBFIs to keep classification unchanged until December of that year to help borrowers tide over the pandemic’s economic shock. The facility has been extended till the end of December this year.
“We are emphasising loans recovery after the government withdrew restrictions on movement,” said Golam Sarwar, the managing director of Industrial and Infrastructure Development Finance Company Ltd.
“It is a reality that most borrowers face difficulties running their businesses amid the pandemic,” said Sarwar, also the first vice-president of the Bangladesh Leasing and Finance Companies Association (BLFCA), a forum of high officials of NBFIs.
The NBFI sector is facing an image crisis with the ailing situation of five to six NBFI, BLFCA Chairman Mominul Islam said recently. BB data show that 10 NBFIs are currently holding 80 per cent NPLs in this sector. A BB inspection team found huge irregularities and scams in 10 NBFIs, including People’s Leasing, International Leasing, Premier Leasing, Uttara Finance, and First Finance.
The Finance Ministry in June 2019 instructed BB to shut People’s Leasing and Financial Services as it failed to repay depositors’ money despite funds maturity. This move put this sector in further crisis but the government went for restructuring the NBFI instead of liquidation.
Former BB governor Salehuddin Ahmed said that those NBFI are the pocket institutions of big industry owners. Some more rules and regulations need to be introduced in this sector to control the situation and establish good governance.
He suggested intensifying BB monitoring of the NBFI to ensure good governance in the sector.
