Classified loans have surged to staggering Tk 2.85 lakh crore, which accounts for nearly 17 per cent of total disbursed loans, according to an updated data released by the Bangladesh Bank on Sunday.
The data shows that total default loan has marked the highest ratio of classified loans to disbursed loans in 16 years, depicting the real picture of the banking sector.
This is for the first time the data on defaulted loans was published after the fall of Sheikh Hasina-led Awami League government on August 5 amid mass upsurge.
Asked about the reason for an unusual increase in non-performing loans, Bangladesh Bank Executive Director and Spokesperson Husne Ara Shikha said that default loan has surged as the international system.
“Earlier, the grace period of term loan was six months. It has now been increased to three months. As a result, defaulted loans increased. Apart from this, loan repayment is decreasing due to a slowdown in business. As a result, default loans have increased,” she said.
Industry insiders, however, believe that the amount of defaulted loans might be much higher than the official figure.
They say that the historically high amount has been recorded because of the failure in loan payment by some big business conglomerates that were affiliated with the AL government.
Economists have long been alleging that a huge amount of money have been looted from the banking sector with the blessing of the AL government.
They claimed that the scopes were given to influential people in taking a large amount of loans from the banks and the lion’s share of the amount had been siphoned off abroad.
Soon after the changeover to the government, the central bank has started taking measures to carry out reforms of the banking sector.
The banks, recently freed from the control of S Alam Group and other influential groups, including former private industry and investment adviser to then prime minister Salman F Rahman and former land minister Saifuzzaman Chowdhury, had their boards reconstituted, also contributed to the increased amount by exposing their real default loan scenario.
Senior officials of the Bangladesh Bank think that the real picture of defaulted loans would come out in the coming days.
The data shows that the banking sector saw the highest rise in default loans, by Tk 73,586 crore, in just three months from July to September this year.
The total default loan stood at Tk 284,977 crore at the end of September, up from Tk 2,11,391 crore in June, according to the data.
In contrast, total classified loans stood at Tk 2,11,391 crore as of June, which indicates a sharp increase of Tk 73,586 crore within just three months, signalling a worrying trend for the nation’s financial stability.
The burden of classified loans is not evenly distributed across the banking sector.
State-owned banks continue to bear the brunt, with Tk 1,26,111 crore in NPLs, amounting to a staggering 40.35 per cent of their total disbursed loans.
Private banks, while comparatively better positioned, are not immune to the crisis. Their classified loans stand at Tk 1,49,806 crore, accounting for 11.88 per cent of their total disbursed loans.
Foreign banks, on the other hand, report classified loans of Tk 3,245 crore, representing 4.99 per cent of their disbursed loans.
Specialised banks also face challenges, with Tk 5,813 crore in NPLs.
The ever-increasing figures highlight the need for urgent reforms in the banking sector.
The unchecked rise in classified loans not only reflects governance issues but also undermines investor confidence in the financial system.
Experts argue that without stringent oversight and stricter loan recovery mechanisms, the situation will continue to deteriorate, further exposing the economy to systemic risks.
This alarming state of affairs calls for swift and decisive action from regulators and policymakers to address the root causes and safeguard the financial sector from long-term damage.
