Reining in bad debt is very tough
Md. Zillur Rahaman :
According to the media, Bangladesh has the second highest non-performing loan rate among South Asian countries and this rate is 8.80 percent. Sri Lanka is at the top and the rate is about 11 percent of the country’s total debt. Nepal has the lowest default rate at less than 2 percent. According to the recently released World Bank Regional Economic Report on South Asian countries, non-performing loans in Bangladesh are increasing at an alarming rate due to high import costs, regular loan defaults by borrowers and weak oversight by regulatory agencies.
Analyzing the data of defaulted loans, it is known that the amount of defaulted loans in Bangladesh has increased more than six times in the last 13 years. In 2009, the size of non-performing loans in Bangladesh was about Tk 22,000 crores, according to the latest data of Bangladesh Bank, currently the amount of non-performing loans in the country stands at Tk 1,31,620 crores. According to the International Monetary Fund, this amount is around Tk 3 lakh crore. Because doubtful loans, loans under court order suspension of default, rescheduled and restructured loans are also treated as defaulters.
Bad loans are now a thorn in the neck of the banking sector. The banking sector is riddled
According to the latest data of Bangladesh Bank, defaulted loans increased by Tk 10,964 crore from January to March this year and in the last one year from April 2022 to March 2023, defaulted loans have increased by Tk 18,180 crores. At the end of March of this year, the total loan in the banking sector in the country was Tk 14,96,346 crore and out of this defaulted loan was Tk 1,31,620 crore, that is, now 8.80 percent of the bank loan is defaulted. Last December, defaulted loans were Tk 120,656 crore or 8.16 percent, which is a worrying figure for the country’s economy and banking sector.
Economists say various irregularities and corruption due to the power and dominance of a handful of unscrupulous officials and political cabals lead to the proliferation of bad loans. If the banks could prevent the tendency of defaulting after taking loans through false information and fraud, then the risk would have been avoided. Transparency and accountability need to be ensured for this. Due to lack of accountability, there have been major loan scams in Sonali Bank, Janata, Basic Bank and other banks. In fact, defaulting on loans has become a subculture in our society. The proliferation of non-performing loans is seriously weakening the foundations of banks. In this case, political will and strong political commitment are essential to prevent such bad culture.
For this reason, there is no alternative but to increase the supervision and monitoring of the banks as well as taking strict legal action against the defaulters. If necessary, strict legislation should be considered without delay in this regard. At the same time, if discipline and good governance are not established in the banking sector, the amount of defaulted loans will continue to increase and it will cause a deeper crisis in the future. Along with the long process in settling cases, the impact of good governance is one of the major problems in the banking sector. Just as there is a need for an up-to-date law in settling cases of defaulted loans, it is also necessary to set up a special bench to settle cases. Only the settlement of these cases in the debt court has become difficult over time. There is much discussion and criticism about defaulted loans; But how much work has been done is a question. The government should ensure the safety of people’s accumulated deposits through political will and consider the banking sector as an integral part of our blood circulation system.
Many people remember that Prashant Kumar Halder (P.K. Halder) fled to India after causing massive irregularities and loan scams in our country. However, the ACC could not arrest him while he was in the country and showed no intention to arrest him. Moreover, it is a matter of surprise that Abdul Hai Bachchu, the former chairman of BASIC Bank, is the master of the bank scam bigger than Prashant Kumar Halder. It is alleged that there is no progress in 56 cases filed by the ACC in connection with the loan fraud of at least Tk 4,500 crores of Basic Bank.
Not only Basic Bank’s Abdul Hai Bachchu, Janata Bank’s Anontex, Crescent and Thermex Group’s corruption, Sonali Bank’s hall-mark scam, Bismillah Group’s money loss have not been punished.
Many other such institutions have been playing the game of the bank for years by taking political shelter and delaying the payment of the loan. Using the courts to give the banking system a thumbs up. In this case, if the government had strong political commitment and goodwill, others would not have had such courage to pay the bank’s defaulted loans. Those concerned say that it is very difficult to rein in defaulted loans without the government firm commitment and political goodwill of the government, be it intentional or unintentional.
(The writer is a banker).
