Default loans double

The amount of default loans in the banking sector almost doubled in 2012 mainly due to scams, loans stuck in some sectors and the new loan classification rules.
The amount stood at 10.03 percent of the banks' outstanding loans to reach Tk 42,726 crore on December 31, according to central bank statistics.
In December 2011, the amount was Tk 22,644 crore or 6.12 percent of the banks' outstanding loans.
Sonali Bank tops the list of banks, which saw a rise in their default loans, due to a huge amount entangled in the Hall-Mark scam.
In 2012, default loans in state banks rose by Tk 12,344 crore, while the amount increased by Tk 5,833 crore in private banks, by Tk 219 crore in foreign banks and by Tk 1,685 crore in specialised banks.
Former deputy governor of Bangladesh Bank Khandker Ibrahim Khaled blamed the rise in default loans mainly on corruption.
He said the central bank's new loan classification policy also raised the amount.
Khaled said a big portion of bank loans invested in the stockmarket is also becoming defaulted.
A BB official said the default loans decreased in December compared to September as per the new loan classification policy.
In September 2012, the amount of classified loans was 11.65 percent of the banks' outstanding loans in line with the new loan classification rules. But in December, the amount came down to 10.03 percent.

He said the new rules will play an important role in restoring credit discipline in the banking sector.
In case of "sub-standard loans", there will not be any problem for the clients to get loans but the banks will have to keep provisioning against their classified loans of the sub-standard category, the official said.
As a result, the banks will be much more cautious in giving loans to clients having bad records.
The commodity market, ship-breaking industry and textile sector went through volatility last year, said Nurul Amin, president of the Association of Banks Bangladesh, a platform of banks' chief executives.
A huge amount of loans was stuck in these sectors, said Amin, also the managing director of NCC Bank.
He said the central bank's new loan classification policy and tight supervision also led to a rise in default loans.
Pubali Bank Managing Director Helal Ahmed Chowdhury said default loans increased in ship-breaking, real estate and commodity sectors.
He said the prices of lands and flats marked a fall, as a result of which loans in these sectors could not be realised properly.
Chowdhury said they have put the loans in the sub-standard category. However, he is hopeful that these loans will be recovered by this year.