12:00 AM, February 18, 2014 / LAST MODIFIED: 01:53 AM, March 08, 2015

Bad loans fall on relaxed rules

Bad loans fall on relaxed rules

Rejaul Karim Byron

Banks' default loans fell 4.99 percent year-on-year in December last year, as the central bank had relaxed loan rescheduling rules for the borrowers affected by political unrest.
The amount was Tk 40,583 crore on December 31 last year, down from Tk 42,725 crore on the same day a year ago.
The amount of classified loans was 8.93 percent of the total outstanding loans in the banking industry as on December 31, 2013, which was 10.03 percent in the same month of the previous year.
At the end of September, the amount reached Tk 56,720 crore as banks' default loans shot up much due to political unrest, a Bangladesh Bank official said.
The increase in default loans was mostly in the state-owned banks and the borrowers from such banks took advantage of the relaxed rules to a large extent. As a result, the state banks' default loans decreased in the last one year, but those at private, foreign and specialised banks marked a rise.

An official of a private bank said political uncertainty accounted for the heightened default loan situation, as most of the classified loans are related to trade financing.
As businesses could not operate normally during the volatile political climate, its chain effect is being felt on the banking sector, the official said.
An official of Janata Bank said their bad loan recovery got a boost as they regularised some loans through rescheduling.
A Sonali Bank official said they made the highest recovery last year in the bank's history and so their default loans decreased.
Default loans at the state banks on December 31 last year were Tk 16,606 crore or 19.76 percent of their outstanding loans, which were Tk 21,514 crore or 23.87 percent a year ago. On the same day, private banks' defaults were Tk 14,315 crore or 4.54 percent of their outstanding loans, which were Tk 13,034 crore or 4.58 percent a year ago.
The amount at the specialised banks was Tk 8,357 crore on December 31 last year, up from Tk 7,330 crore a year ago. Foreign commercial banks' default loans were Tk 1,303 crore in December last year against Tk 845 crore a year ago.
Among a total of 56 banks, classified loans of six rose, while 40 saw the amount fall, and it remained unchanged at 10 banks.


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