Home ›› 15 Mar 2022 ›› Front
The amount of default loan of the non-bank financial institutions (NBFIs) has reached an all-time high largely because of the widespread irregularities and corruptions of the concerned managements and officials.
According to the Bangladesh Bank’s latest data, bad loans at 34 NBFIs stood at Tk1,3016 crore at the end of December last year, accounting for 19.33 per cent of the sector’s total outstanding loans of Tk6,7354 crore.
Meanwhile, non-performing loans (NPLs) in the NBFI sector rose by 29.47 per cent year-on-year by December last year despite the central bank’s regulatory forbearance.
The NPLs rate of NBFIs was much higher than the NPLs rate of the banking sector, which was 7.93 per cent at the end of the same period.
A number of NBFIs had hidden their non-performing loans from their balance sheets, which came to light during the central bank’s inspection, said a high official of the central bank’s Financial Institutions Division.
As a result, the bad loans have increased in the last quarter despite the loans moratorium facility offered by the central bank, he added.
On March 24, 2020, BB requested that NBFIs maintain their categorization until December of that year in order to assist borrowers in coping with the pandemic’s economic blow.
The facility was later extended till December 31, 2021.
“As the loans moratorium facility expired in December last year, we are now focusing on loan recovery,” said Golam Sarwar, managing director of Industrial and Infrastructure Development Finance Company (IIDFC).
He stated that IIDFC has devised a strategy to recoup the defaulted debts.
“We are taking legal action against delinquent borrowers in some cases, while we are recovering loans in others by selling mortgages, added Golam Sarwar, who is also the first vice-president of the Bangladesh Leasing and Finance Companies Association (BLFCA), a forum of senior executives from NBFIs.
BB officials said bad loans in the NBFI sector continued to accumulate due to huge irregularities and scams.
Only five to six NBFIs out of 34 were doing well, according to them.
The BB data shows that ten NBFIs currently hold about 80 per cent of NPLs in this sector.
A BB inspection team recently found huge irregularities and scams in 10 NBFIs, including People’s Leasing, International Leasing, Premier Leasing, Uttara Finance, and First Finance.
In June 2019, the Finance Ministry ordered BB to close People’s Leasing and Financial Services because it had failed to reimburse depositors’ money despite the funds’ maturity. This decision exacerbated the sector’s problems, but instead of liquidating the NBFI, the government chose to restructure it.
Former BB governor Salehuddin Ahmed said to The Business Post that those ailing 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.
