Default loan triples in 10 years: CPD

The volume of non-performing loans (NPLs) has increased by more than three times in the last 10 years, according to a report of the Centre for Policy Dialogue (CPD) yesterday. 

NPLs surged to Tk 134,396 crore in the first quarter of the ongoing fiscal year of 2022-2023 from Tk 42,725 crore in the fourth quarter of FY2012, as per the report.

CPD Executive Director Fahmida Khatun made a presentation on the report titled "Managing the Economic Crisis: CPD's policy recommendation" at a programme at the Brac Centre Inn in Dhaka.

"However, actual NPL will be much higher if loans in special mention accounts, loans with court injunctions, and rescheduled loans are included," she said.

According to the report appointments of bank directors based on political connections, loans sanctioned on political grounds, rescheduling of loans despite the poor record of repayment, and writing off loans to reduce the tax burden and clean balance sheets are among the reasons behind the high volume of the NPLs in the country.

"Besides, the weak internal control and compliance risk management of banks, lack of independence of the Bangladesh Bank, dual regulation by the Financial Institutions Division and the central bank, and flexibilities given to defaulters by the central bank are also responsible for the high volume of the NPLs," it said.