MuhidHasan :
The non-performing loans (NPLs) in the country’s banking sector hit an all time high of Tk 211,391 crore at the end of June this year, according to the latest Bangladesh Bank data.
The banking sector has ballooned around ten times in the last 15 years. It was Tk 22,000 crore in 2009 when the Awami League won the first general elections.
The amount of NPLs surged significantly throughout the Sheikh Hasina’s regime thanks mainly to the nepotism, state sponsored cronyism, and culture of embezzlement in the sector.
Earlier in June 2012, the figure stood at Tk 42,725 crore and in March 2019 for the first time Bangladesh’s NPLs crossed the Tk one lakh crore mark, reaching Tk 1.09 lakh crore.
Even the amount of NPLs jumped by 16.14 percent during the June quarter (April-June) this year compared to the previous March quarter.
According to the latest data from the central bank, at the end of March 2024 , the amount of defaulted loans stood at Tk1.82 lakh crore, which was also a record high at the time. Additionally, defaulted loans increased by around Tk29,391 crore during the June quarter (April-June) of 2024.
The central bank data also showed at the end of June this year, total disbursed loans stood at Tk 16,83,855 crore in the banking sector.
Now, NPLs have increased to 12.56 percent of the total outstanding amount based on official data, which is the highest in the country’s banking sector.
The burden of classified loans in the state-owned commercial banks was at 32.77 percent of the outstanding loans, followed by specialized banks at 13.11 percent, private commercial banks at 7.94 percent, and foreign commercial banks at 4.74 percent.
Sector insiders said defaulted loans have increased in state-owned banks, therefore increasing in the overall banking sector.
During this period, data from state-owned banks showed several customers as defaulters of long-standing loans.
However, addressing the NPL scenario in a study the Centre for Policy Dialogue (CPD) said high concentration of NPLs is not only a problem for the state-run bank but also the private banks.
The increase in the share of NPLs in the private banks shows that the performance of the private commercial banks has worsened substantially over time Moreover, rejecting the official data, veteran economist and academician professor Muinul Islam said the actual amount of defaulted loans in the banking sector has exceeded at least Tk four lakh crore.
Out of the actual amount, nearly half of the amount is stuck in lawsuits over the years and not shown as defaults on the balance sheets of banks because, as long as the cases continue, it will not be considered as default loans, he mentioned.
Fahmida Khatun, the Executive Director of Centre for Policy Dialogue (CPD) said the banking sector of the country becomes monopolized due to decline of governance where financial oligarchs under crony capitalism in the country is using the sector as vehicles for reaching their goals to accumulate more capital.
Loan approval, rescheduling, write-off, and foreclosure were all being done in the banks whimsically.
The central bank is not acting independently on their will, but under external pressure.
For this, the entire banking sector of the country has lost its capacity to support macroeconomic stability, she added.
Between 2008 to 2023 around Tk 92,261 crore was embezzled in 24 major banking scams, as per the latest data from Centre for Policy Dialogue (CPD).
The embezzled amount is equivalent to 12 percent of Bangladesh’s national budget of FY24, or 2 percent of the country’s gross domestic product for FY23.
The local think tank gave the information that “In 2017, a single corporation gained control over 7 private commercial banks in Bangladesh.
Several previously good banks have experienced an unfortunate decline in their performance after hostile takeovers by crony capitalists.”
S Alam Group took out about Tk 30,000crore in loan from Islami Bank Bangladesh Ltd only in 2022.
CPD added that in the last 15 years, governors of Bangladesh Bank and other state mechanism helped the vested interest groups either by ignoring the existing rules or changing the laws to favour them.