Skyrocketing loan defaults

With the announcement of a huge number of benefits for the loan defaulters at the beginning of the year, the defaulting loans of banks increased by Tk 16,962 crore in the first three months alone. Defaulted loans amounted to Tk 110,873 crore as of March—the highest ever recorded.

Finance Minister Mustafa Kamal, in a pre-budget discussion, remarked on how the country would malfunction if all businessmen were penalised for defaulted loans. According to the new policy, defaulters will be able to reschedule their classified loans and they can do so by providing only 2 percent down payment. The time for repayment has also been extended. So far, the repercussions of these changes are making the situation worse.

Bangladesh Bank officials say the amount of defaulting loans is actually higher than what the reports are claiming. Many banks are unable to recover larger loans, and those involved are not even identified as defaulters. The real picture of our banks is dubious at the moment and this is not a good sign for our economy.