Bank loans

Delinquent bank loans hit a record 1.25 trillion in Bangladesh

| Updated:
08 September 2022 23:54:35

The amount of delinquent bank loans in the country increased by around 9.0% to a record Tk 1.25 trillion amid the negative impact of the Covid-19 pandemic till June this year.

According to Bangladesh Bank’s June quarter report, the disbursement of loans from banks stood at 13.98 trillion taka till June 2022, of which 8.96% or 1.25 trillion taka went into in bad debt, reports UNB.

Despite the loan moratorium and the reduction in the number of annual installments, the volume of delinquent loans has reached an all-time high in the country so far, according to the report.

Three months ago, in the March quarter of 2022, delinquent loans totaled Tk 1.13 trillion, according to the report.

As a result, in the second quarter of the year (April-June), the amount of loans that remained unpaid on time in the banking sector increased by 0.11 trillion taka.

In the first quarter (Jan-March), there was an increase in overdue repayments from Tk 0.10 trillion to Tk 1.13 trillion.

Renowned economist, Dr. AB Mirza Azizul Islam said, “If you want to reduce delinquent loans, you have to increase debt collection. At the same time, the mass moratorium and the reduced installment facility should be stopped for borrowers.

He explained why. “Because having been able to get concessions for several years, defaulters now think that if I don’t repay the loan, I will get more concessions in the future. Thus, the installation of defaulters should be stopped.

Former Bangladesh Bank Governor Dr Salehuddin Ahmed echoed Island.

He said loan recovery should focus on legal process as banks lend money to small depositors. Without legal action, the benefit of depositors would not be guaranteed.

In response to a question about the capital shortfall of different banks, he said that the more delinquent loans increase, the more security provision needs to be kept at the central bank.

Banks have run into capital shortages while keeping that extra cash on the outside, he said.

The latest central bank report revealed that the capital shortfall of seven public banks, including two of the specialized banks, was 0.26 trillion taka at the end of June.

Of this total, Bangladesh Krishi Bank has the highest deficit of Tk 0.13 trillion. The second highest deficit of Tk 25.07 billion at Agrani Bank, Tk 22.78 billion at Sonali Bank, Tk 22.61 billion at Rupali Bank, Tk 21.24 billion at Basic Bank, Tk 16.03 billion to Janata Bank and Tk 21.49 billion to Rajshahi Agricultural Development Bank.

The capital shortfall of five private sector banks is 34.37 billion taka. Among them, the deficit of Islamic Bank ICB is Tk 16.59 billion, Bangladesh Commerce Bank Tk 12.12 billion, National Bank Tk 3.0 billion, Tk 2.63 billion Padma Bank and Tk 230 million to Bengal Commercial Bank.

At the end of June 2022, the total capital shortfall of 12 banks stood at 0.29 trillion taka in the banking system, according to the report.