Dhaka, Bangladesh (BBN) – The volume of classified loans in the country’s banking system jumped by 15.65 per cent in the first quarter (Q1) of the ongoing calendar year despite close monitoring by the central bank.
The amount of non-performing loans (NPLs) rose by BDT 80.40 billion to BDT 594.11 billion during the January-March period of this year from BDT 513.71 billion in the preceding quarter, according to the central bank latest statistics.
The share of NPLs also rose to 9.92 per cent during the period under review from 8.79 per cent three months back.
The classified loans cover substandard, doubtful and bad/loss of total outstanding credits which stood at BDT 5986.48 billion as on March 31 last, the Bangladesh Bank (BB) data showed.
The BB officials expect that the amount of classified loans will decrease in the second quarter (Q2) of this year.
They also said the volume of NPLs normally rises slightly during the Q1 and Q3 of each year.
During the January-March 2016 period, the total amount of NPLs with six state-owned commercial banks rose to BDT 272.89 billion from BDT 237.45 billion in the previous quarter.
On the other hand, the volume of classified loans with 39 private commercial banks reached BDT 253.31 billion in the Q1 from BDT 207.60 billion three months ago.
The NPLs with nine foreign commercial banks came down to BDT 18.22 billion during the period under review from BDT 18.97 billion of the previous quarter.
The classified loans with two development-finance institutions remained unchanged at BDT 49.69 billion in the Q1, according to official figures.
Senior bankers, however, said the amount of classified loans found a high rise because of less rescheduling of unpaid loans and a relaxed trend in recovery during the period under review.
Most bankers normally remain less serious in the Q1for recovering their classified loans, they explained.
Growing NPLs add to the operating costs of the banks and the burden is shifted to fresh borrowers by way of wide spread between deposit and lending rates and also to depositors by lowering interests on public deposits, according to experts.