Over 40pc loans now classified as distressed

Staff Reporter :

The amount of distressed assets in Bangladesh’s banking sector surged to Tk 6,75,030 crore by the end of June this year, according to the White Paper Committee on Bangladesh’s economy.

This staggering figure includes defaulted loans, rescheduled loans, write-offs, and loans unclassified by court orders.

The report revealed that Tk 2,11,391 crore were recognised non-performing loans (NPLs), Tk 2,72,856 crore were rescheduled and restructured loans, Tk 75,389 crore were written-off loans, Tk 39,209 crore were special mention accounts, and Tk 76,185 crore were loans pending under court orders.

By June 2024, the total loans disbursed amounted to Tk 1,683,396 crore, with nearly 40 per cent of these loans already classified as distressed, including 12.56 per cent as non-performing.

Alarmingly, the banking sector has seen an increase of Tk 1,90,000 crore in non-performing loans since 2009, when the Awami League-led government took power, attributed to lenient rules, undue facilities provided to large borrowers, and the lack of disciplinary measures against defaulters.

The report highlighted that rescheduled or restructured loans, often window-dressed as performing loans, and amounts written off due to their prolonged status as bad debts, are key contributors to the distress in the sector.

The report also identified that the manufacturing sector, despite being the fastest-growing, accounted for 49 per cent of loans extended and 55 per cent of NPLs.