Only one-fifth of written off loans recovered

The banking industry has been able to recover only one-fifth of their written off loans in the last 14 years in what can be described as a spectacular backfire of the central bank policy introduced in 2003.

The Bangladesh Bank introduced the policy with the view to cleaning up the banks' balance sheets. “But banks were asked to continue their recovery efforts,” said a senior BB official.

Between January 2003 and March 2017, banks wrote off a total of Tk 44,412 crore. Of the amount, Tk 34,922 crore, or 79 percent, remained outstanding at the end of March.

In short, the practice is contributing to the banks' deteriorating financial health, as every year the write-off loan figure is increasing.

The amount of written off loans in state-owned banks stood at Tk 17,732 crore and at private banks Tk 16,079 crore.

The amount of written-off in the two state-run specialised banks -- Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank -- was Tk 555 crore.

Foreign commercial banks wrote-off Tk 761 crore.

The BB data, however, showed that banks' total written-off loans decreased to Tk 34,921.65 crore at the end of March from Tk 36,150 crore three months earlier.

The written-off loans decreased in the first quarter as some banks made some recovery during the period.

As of June 30, total default loans in the banking sector stood at Tk 74,148 crore, up 19.6 percent from the preceding six months.

The total amount of default and written-off loans together stood at more than Tk 1.09 lakh crore at the end of June.

For write-offs, banks have to file law suits with the money loan court against the defaulters and keep 100 percent provisioning.