NPL hits historic high of Tk2.85lakh crore at Q3Y24 end
Muhid Hasan :
The total volume of non-performing loans (NPLs) in Bangladesh’s banking sector has surged to Tk 2,84,977 crore, representing about 17 per cent of the total outstanding loans as of the July-September quarter (Q3Y24).
According to Bangladesh Bank data released on Sunday, the banking system currently has Tk 16,82,800 crore in outstanding loans, marking the highest volume of bad loans in the country’s history.
NPLs have increased nearly twelve-fold over the past 16 years.
When the Bangladesh Awami League (AL) came to power in 2009, the amount of defaulted loans was Tk 22,481 crore.
By June 2012, this figure had risen to Tk 42,725 crore, and in March 2019, NPLs crossed the Tk one lakh mark for the first time, reaching Tk 1.09 lakh crore.
Insiders have long alleged that significant amounts of money were looted from the banks, under the guise of defaulted loans, and laundered abroad, often with political backing.
They also point to consistent failures in governance standards and credit discipline, exacerbated by political pressure on banks’ boards and management.
The most recent surge in NPLs is attributed to both international accounting practices and the economic slowdown, which has led to reduced loan repayments.
Bangladesh Bank Executive Director and spokesperson Husne Ara Shikha explained that the reduction in the grace period for term loans from six months to three months contributed directly to the rise in defaulted loans.
Critics, however, argue that the significant rise in NPLs is linked to the inability of large business conglomerates – many with ties to the Awami League government – to make timely loan repayments. They also suggest that the central bank is now pushing to eliminate the practice of hiding bad loans, contributing to the visible surge in defaults.
By Q3Y24, state-owned banks accounted for Tk 1,26,111 crore of defaulted loans, or 40.35 per cent of their disbursed loans, while private commercial banks reported Tk 1,49,806 crore, or 11.88 per cent of total loans. Specialized banks had Tk 5,813 crore in defaulted loans.
A recent study by the Centre for Policy Dialogue (CPD) highlighted the concentration of NPLs in both state-owned and private banks, pointing to a decline in private sector banking performance over time.
CPD also estimated that under the Hasina regime, around Tk 92,261 crore was embezzled in 24 major banking scams, equivalent to 12 per cent of Bangladesh’s FY24 national budget or 2 per cent of GDP for FY23.
Talking with The New Nation, veteran economist Professor Muinul Islam rejected official figures, claiming that the actual volume of defaulted loans exceeded Tk 4 lakh crore.
He pointed out that nearly half of this amount is tied up in long-running lawsuits and not reflected in the banks’ balance sheets, as such loans are not classified as defaults until the cases are resolved.