10 banks hold 63.59% of bad loans

Ten banks – including state-run Janata Bank and private commercial National Bank – hold 63.59 per cent of bad loans in the country’s banking sector.

At the end of June this year, non-performing loans (NPLs) stood at Tk 1,25,257.57 crore, and of this figure, ten banks  held Tk 79,655 crore or 63.59 per cent of the NPLs. Scam hit Janata Bank has the highest amount of bad loans reaching Tk 17,263 crore, central bank data shows.

The state run bank’s NPLs stood at Tk 12,137 crore in December last year. Janata’s bad loans rose by 42.23 per cent during just the six months of this year. It is still suffering from the loan irregularities of AnonTex and Crescent leather, insiders told The Business Post.

After Janata Bank, Sonali, Agrani and BASIC Bank have the leading position in terms of defaulted loan amounts. The financial health of those state-run banks remained unchanged despite the central bank’s close monitoring.

In the first six months of this year, Sonali Bank’s bad loans rose by 8 per cent, Agrani Bank’s by 36.12 per cent, BASIC Bank’s by 5.09 per cent and Rupali Bank’s by 22.60 per cent,

National Bank has the highest Tk 9,394 crore NPLs among private commercial banks.  The bank’s defaulted loans rose by 58 per cent during the January-June period this year.

The Bangladesh Bank had found significant irregularities in the private sector banks including the violation of credit card-related regulations.

National Bank allowed 11 persons, including its board directors and their family members, to spend a staggering $10.65 million (about Tk 91.4 crore) through credit cards, which is a serious breach of banking rules.

The amount was spent from 2017 to 2021 by nine family members of Zainul Haque Sikder, the bank’s former chairman, and two top executives of Sikder Group, according to a probe carried out by the central bank.

They spent the amount violating the central bank policy that allows a Bangladeshi national to spend a maximum of $12,000 per year outside of the country through credit cards or cash.

During January to June period of this year, private commercial Islami Bank’s defaulted loans rose by 14.49 per cent; AB Bank’s by 7.81 per cent; Padma Bank’s by 7.77 per cent and one Bank’s by 46.18 per cent, as per the regulator data.

The Bangladesh Bank recently identified ten weak banks in terms of bad loans, capital adequacy, advance to deposit ratio and provision shortfall.

Lack of good governance, corruption, political interference in approving loans and the culture of impunity were the main reasons for growing bad loans in the industry, said Zahid Hussain, former lead economist of the World Bank’s Dhaka Office.