Muhid Hasan :
In a sweeping revelation that echoes throughout Bangladesh’s financial corridors, latest data released by the Bangladesh Bank has unveiled a disconcerting reality: the total volume of non-performing loans (NPLs) within the nation’s banking sector has soared to unprecedented heights.
Over the span of 12 years, from 2012 to the present, NPLs have ascended from Tk 42,725 crore in June 2012 to a staggering Tk 1,82,295 crore as of March 2024.
This exponential surge, surpassing fourfold growth, serves as an ominous indicator of the challenges besieging the country’s financial landscape.
At the end of March this year, total disbursed loans stood at Tk 16,40,855 crore, underscoring the substantial impact of NPLs on the banking industry.
Sector insiders attribute the rise in bad loans primarily to state-owned banks, with several customers defaulting on long-standing loans. The lax approach of the central bank towards defaulters has exacerbated the situation.
The six state-run banks experienced a notable increase in NPLs, with default loans soaring by Tk 6,805 crore in the three months ending in March. Notably, Janata Bank witnessed a record-high default loan amount of Tk 30,495 crore in March, representing 31 percent of its total loan disbursement.
However, there were some exceptions to this trend. Agrani Bank’s NPL declined marginally from Tk 21,476 crore in December to Tk 20,864 crore in March, while BDBL saw a decrease in default loans from Tk 993 crore in December to Tk 873 crore in March.
Addressing the concerning NPL scenario, the Centre for Policy Dialogue (CPD) highlighted that high concentrations of NPLs are not limited to state-run banks but also affect private banks.
The CPD’s latest study emphasized that the actual NPLs could be much higher if loans in special mention accounts, those with court injunctions, and rescheduled loans are included.
Eminent economist and academician Professor Muinul Islam raised concerns over the actual amount of defaulted loans in the banking sector, estimating it to exceed Tk four lakh crore. Nearly half of this amount is stuck in lawsuits over the years and is not reflected as defaults on the balance sheets of banks.
The rising tide of NPLs poses a significant challenge to Bangladesh’s banking sector, requiring concerted efforts from regulators, banks, and policymakers to address this burgeoning issue and ensure the stability of the financial system.