Industrial default loans soar 30pc

Defaults in the industrial sector soared 30.31 percent at the end of September as large borrowers who enjoyed restructuring facilities under a special Bangladesh Bank scheme in 2015 failed to repay their loans.

As of September, industrial default loans stood at Tk 31,270 crore, up from Tk 23,997 crore a year earlier, according to data from the BB.

"Some business groups misused the central bank's restructuring facility," said MA Halim Chowdhury, managing director of Pubali Bank.

Owing to the economic damages caused by the political unrest, the central bank in a special move offered borrowers who had loans amounting to more than Tk 500 crore rescheduling facility on relaxed terms.

For rescheduling, the borrowers had to make down payment of just 1-2 percent of the loan amount instead of the usual 10-15 percent.

Some 11 large borrowers took up on the offer and loans amounting to Tk 15,000 crore were restructured.

"Those groups have slid into the default zone again," Chowdhury said, adding that some other business groups have recently joined them, all of which have puffed up the non-performing loans in the industrial sector.

Syed Mahbubur Rahman, managing director of Dhaka Bank, echoed the same.

Of the industrial default loans, the state-owned commercial banks accounted for Tk 13,064 crore, up 23.49 percent year-on-year.

The private banks had Tk 14,162 crore as industrial defaults at the end of September, up from Tk 9,830 crore a year earlier.

Non-bank financial institutions' industrial defaults soared to Tk 2,544 crore from Tk 2,380 crore in September last year.

The government claimed that the industrial outlook was good but the actual fact and figures did not reflect that, said AB Mirza Azizul Islam, a former finance adviser of a caretaker government, told The Daily Star yesterday that

"The export earnings have failed to register a satisfactory growth in the recent period, indicating that the industrial sector has not been run properly."

Besides, the habitual defaulters are up to their same tricks again: not paying back their loans despite enjoying frequent rescheduling facilities, Islam added.    


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