The amount of defaulted bank loans in the country increased by about 9 percent to a record Tk 1.25 lakh crore amid the adverse impact of Covid-19 pandemic until June this year.
According to Bangladesh Bank’s June quarter report, banks' loan disbursement stood at Tk 13.98 lakh crore till June 2022, of which 8.96 percent or Tk 1.25 lakh crore turned into bad loans.
Despite the loan moratorium and reducing the number of annual installments, the volume of defaulted loans has reached a record high in the country so far, said the report.
Three months ago, in the March quarter of 2022, the defaulted loans totalled Tk 1.13 lakh crore, according to the report.
Accordingly, in the second quarter of the year (April-June), the amount of loans that remained unpaid in time in the banking sector increased by Tk 11,818 crore.
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In the first quarter (January-March) there was an increase of defaulted repayment by Tk 10167 crore, to Tk 1.13 lakh crore.
Noted economist Dr. A B Mirza Azizul Islam told UNB, “If you want to reduce defaulted loans, you have to increase debt collection. At the same time, bulk moratorium and reduced number installment facility should be stopped for the borrowers.”
He explained why. “Because, having been able to get concessions for several years, the defaulters now think that if they don't repay the loan, they will get more concessions in the future. So the facility of the defaulters should be stopped.”
Former Bangladesh Bank governor Dr. Salehuddin Ahmed echoed the views.
He said that the loan collection should be focused on the legal procedure as the banks lend money to small depositors. Without legal action the depositors' benefit would not be secured.
In reply to a query about the capital shortfall of different banks, he said that the more defaulted loans increase, the more security provision should be kept at the central bank.
Banks have run into capital shortages while keeping this extra money out, he said.
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The central bank’s latest report found that the capital deficit of seven state-owned banks, including two of the specialized banks, was Tk 26095 crore at the end of June.
Out of this, Bangladesh Krishi Bank has the highest deficit of Tk 13171 crore. The second highest deficit of Tk 2507 crore is at Agrani Bank, Tk 2,278 crore in Sonali Bank, Tk 2,261 crore in Rupali Bank, Tk 2,124 crore in Basic Bank, Tk 1,603 crore in Janata Bank, and Tk 2,149 crore in Rajshahi Agricultural Development Bank.
The capital shortfall of five private sector banks is Tk 3,437 crore. Among them, the deficit of the ICB Islamic Bank is Tk 1,659 crore, Tk 1,212 crore at Bangladesh Commerce Bank, Tk 300 crore at National Bank, Tk 263 crore at Padma Bank, and Tk 23 crore at Bengal Commercial Bank.
At the end of June 2022, the total capital deficit of 12 banks stood at Tk 29531 crore in the banking system, said the report.