Defaulted loans in govt banks rising unabated

Despite adopting a number of measures, including the Bangladesh Bank’s supervision, appointing former and incumbent bureaucrats as directors in the board of directors of various banks, the amount of defaulted loan is not decreasing.

As a result, the amount of defaulted loans in all the state owned banks except the Agrani Bank and Bangladesh Development Bank PLC (BDBP) rose in the January-March quarter, said a Bangladesh Bank source.

The central bank asked four state owned banks to bring down the defaulted loans within 12 per cent in June as part of the loan conditions of the International Monetary Fund (IMF).

The banks are - Sonali Bank, Agrani Bank, Janata Bank and Rupali Bank.

However, none of the banks could bring the amount within the target, mainly because none of them were directed about strategies to reduce the amount. As a result, the amount of defaulted loans has actually soared.

As part of its loan conditions, the IMF has asked Bangladesh to bring down the defaulted loans to 10 per cent within 2024.

According to the central bank, Sonali Bank’s defaulted loans rose to Tk 149.88 billion in March from Tk 133.4 billion in December last year. Janata Bank saw an increase in the defaulted loan by Tk 54.86 billion in that time, with the current amount standing at Tk 304.95 billion.

In the same period, the defaulted loans of Rupali Bank rose by Tk 3.14 billion to Tk 103.57 billion while the BASIC Bank’s defaulted loan amount increased by Tk 930 million and currently stands at Tk 82.97 billion.

However, in these three months, Agrani Bank’s defaulted loan has decreased by Tk 6.12 billion to Tk 208.64 billion and BDB PLC’s defaulted loan has decreased by Tk 1.2 billion to Tk 8.73 billion.

It is known that at the end of March this year, the default rate of Sonali Bank stood at 14.84 per cent, Janata Bank 31 per cent, Agrani Bank 28 per cent, Rupali Bank 21 per cent, BDB PLC 33.97 per cent and Basic Bank 63 per cent.

Bangladesh Bank officials said that almost all of the big customers of the state owned banks are close to the government and are in various posts.

Their debts are remaining outside of supervision. Some loans that were good earlier have turned into defaulted ones. Due to the new rules for identifying defaulters, the number of defaulted loans will increase in future, they added.