BB chief warns bankers against loan default culture

Bangladesh Bank governor Fazle Kabir has warned the bankers against the bad impact of the ‘corporate default culture’ in the banking sector.

“Bankers have to be very cautious about the corporate default culture in the banking sector,” he said while unveiling the central bank’s “Financial Stability Report 2016” at a function at Bangladesh Bank.

The Financial Stability Report reveals that about 10 per cent of the total bank loans were rescheduled in 2016.

Of the default loans, commercial credit tops the list where it shares 23 per cent and it was followed by garment sector’s credit representing 12 per cent. The large credits share 10 per cent of the total default loans.

As per the report, some Tk 100,217 crore was disbursed as commercial credit in 2015, of which Tk 8,500 crore became default while Tk 28,021 crore was distributed as agriculture credit, of which Tk 4,006 crore became default.

The garment sector received Tk 73,753 crore as credit with Tk 6,103 crore being defaulted.

Fazle Kabir said banking sector has to come out of the default loan culture for the sake of maintaining stability in the financial sector.

He directed the bankers to prefer the small and medium entrepreneurs (SME) to provide loans and reduce the ratio of large loan in the total credit disbursement.

With BB deputy governor SK Sur Chowdhury in the chair, the function was also addressed by deputy governors Abu Hena Razee Hasan and Moniruzzaman and chairman of Association of Bankers, Bangladesh (ABB) Anis A Khan.

Top officials of different public and private banks were also present here.