Banks can’t be at the mercy of big loan defaulters

Most state-owned banks have become something like personal properties of the top 20 defaulters during the tenure of this government.

For a long time these business entities are failing to pay back the loan to the banks jeopardising the banks’ health.

Moreover, the amount of money the defaulters owe to the banks is increasing day by day.

A very dismal picture of the four state-owned banks was found in the review of the financial report of Bangladesh Bank for the month of June.

While Rupali Bank’s performance regarding loan collection is rather satisfactory – it collected 19 per cent of the target – Sonali, Janata and Agrani Banks failed to cross a single digit of the collection target.

It has been reported that, for a long time, Bangladesh Bank, the overseeing institution of all banking institutions, public or private, has been urging banks to be strict in recovering defaulted loans.

Since these banks are failing to recover the money, the central bank must also take the share of the blame as the overseeing authorities.

According to Bangladesh Bank’s June 2023 report, the state-owned Janata Bank owes Tk 8,739 crore from the borrowers to the top 20 defaulters.

The cash collection target for January-June this year was Tk 870 crore. Only Tk 16 crore was collected, which is only 2 per cent of the target.

On the other hand, the bank owes Tk 6,459 crore to other defaulters.

Here the target of realisation is Tk 645 crore. Tk 110 crore has been realised, which is 17 per cent of the target.

According to the report, the top 20 defaulters of state-owned Agrani Bank owed Tk 6,854 crore. The collection target in six months was Tk 685 crore.

Defaulters paid only Tk 12 crore, which is 2 per cent of the target. On the contrary, the bank owed Tk 8,546 crore to other defaulters.

The target of realisation was Tk 850 crore, but Tk 202 crore was collected, which is 24 per cent of the target.

The same loan recovery scenario is found about Sonali Bank that owed Tk 4,284 crore from the top 20 defaulters.

While the target of recovery was Tk 300 crore, only Tk 26 crore was recovered, which is 9 per cent of the target.

Regarding this dismal state of affairs, one former governor of Bangladesh Bank rightly pointed out that defaulters have more power than banks.

It is no secret that these defaulters are the crony businessmen of the government who not only have made the public banks empty, they have also spread their tentacles to private banks and have started devouring them.

The Shariah-based Islami Bank is an example. Banks in Bangladesh cannot be at the mercy of the big loan defaulters.