Banks’ NPLs again cross Tk 1 lakh crore

Non-performing loans (NPLs) in the banking sector have crossed Tk 1 lakh crore after 27 months despite the central bank’s policy support to stop the rot.

As of September this year, the volume of NPLs stood at over Tk 1,01,150 crore, accounting for 8.18 percent of the total outstanding loans, according to the latest data from the Bangladesh Bank. The figure was up by Tk 1,945 crore from Tk 99,205 crore recorded in June this year.

The NPLs or bad loans first crossed Tk1 lakh crore in June 2019, when the figure was Tk 1,12,425 crore.  It had hit an all-time high in September 2019 when it was Tk 1,16,288 crore.

The volume of NPLs dropped last year as the central bank offered a loan moratorium facility on installments for all clients, bankers say.

But this year the facility has been provided to the clients based on bank-customer relationships, leading to the rise of NPLs, they said.

The NPLs increased in the third quarter of this year as most of the banks suspended the central bank’s policy support for bad clients, according to them.

“We didn’t extend the facility to the bad clients. This is the main reason for the rising NPLs,” said Mutual Trust Bank Managing Director and CEO Syed Mahbubur Rahman.

The bad loans might increase further in days to come as the central bank’s policy backup will end in December this year, he predicted. Businesses enjoyed the moratorium facilities on loan installments throughout the last year hit by the Covid-19. The ongoing moratorium facilities continue depending on the bank-customer relationship.

“The moratorium facilities should not be extended further,” said a top banker requesting not to be named. He said that the economy reopened after winding down the impact of pandemic affected global economic activity since early 2020. “However, entrepreneurs tend to show the lame excuses,” said the banker.

Several top trade bodies have been pursuing the BB to extend the loan moratorium facility, which has no ground, he added.

In September this year, the NPLs of state-run banks stood at Tk 44,016.38 crore, making up 20.07 percent of their total disbursed loans.

The NPLs of private banks stood at Tk 50,743.14 crore, Foreign Banks at Tk 2,691.78 crore and specialised banks Tk 3,699 crore, according to the BB data.

Total outstanding loans in the banking sector stood at Tk 12,45,391.58 crore during the period.