Leasing firms grapple with default loans
Default loans of leasing companies rose significantly -- by 2 percentage points --between March and June this year, according to Bangladesh Bank (BB).
Such loans reached Tk 790 crore, or 8 percent of Tk 9,667 crore the companies lent as of June 30, 2008. These classified loans account for 6 percent of the total loans in March the same year, BB officials said.
The central bank in separate letters recently has asked some seven leasing companies, which have high amount of default loans, to speed up their drives to recover the loans as soon as possible.
These companies are Saudi Bangladesh Industrial and Agricultural Investment Co Ltd (Sabinco), International Leasing and Financial Services Ltd, Bangladesh Industrial Finance Co Ltd, Union Capital Ltd, Fareast Finance and Investment Ltd, Oman Bangladesh Leasing and Finance Ltd and Industrial Promotion and Development Co of Bangladesh.
There are 29 leasing companies operating in Bangladesh, total investment of which is around Tk 10,000 crore, according to the market players. They said the financial institutions that are bad-loan-hit are struggling to get their loans repaid.
“We have planned to take legal actions against the defaulters. Already we have served notices to some of the big defaulters to repay the amounts they borrowed,” Ramendranath Paul, managing director of Union Capital Limited, told The Daily Star.
He, however, admitted that declining business confidence and infrastructure constraints, i.e., erratic supply of gas and power, hinder their business and investment growth and recovery moves as well.
A senior official of the International Leasing and Financial Services Ltd said, “Businesses are struggling hard to sustain in the wake of hike in oil and raw material prices in the international market.”
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