Dhaka, Bangladesh (BBN)- The volume of non-performing loans (NPLs) in the country’s banking system increased by 6.65 per cent in the second quarter (Q2) of this calendar year despite close monitoring by the central bank.
The amount of NPLs rose to BDT 633.65 billion during the April-June period of this calendar year from BDT 594.11 billion in the preceding quarter, according to the latest central bank statistics.
The share of NPLs also rose to 10.06 per cent during the period under review from 9.92 per cent three months back.
As such, the share of classified loans rose to 10.06 per cent during the period under review from 9.92 per cent three months before.
“The volume of classified loans increased slightly during the Q2, but it is still in tolerable level,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
He also said the BB had already instructed the banks to reduce the volume of classified loans through expediting their recovery drives across the country.
Talking to the BBN, another BB official said the volume of NPLs may decrease by the end of December this year. “The existing trend in classified loans may continue during the Q3 of this year.”
Classified loans cover substandard, doubtful and bad/loss portions of total outstanding credits which stood at BDT 6300.19 billion as on June 30 last. It was BDT 5986.48 billion as on March 31, 2016.
During the April-June 2016 period, the total amount of NPLs with six state-owned commercial banks (SoCBs) rose to BDT 300.77 billion from BDT 272.89 billion in the previous quarter.
On the other hand, the total amount of classified loans with 39 private commercial banks (PCBs) came down a little bit to BDT 253.15 billion in the Q2 from BDT 253.31 billion three months before.
The NPLs of nine foreign commercial banks (FCBs) rose to BDT 21.56 billion from BDT 18.22 billion of the previous quarter.
The classified loans with two development-finance institutions (DFIs) came down to BDT 58.17 billion in the Q2 from BDT 49.69 billion in the Q1, the BB data showed.
“Some rescheduled loans had already entered into classified territory that has pushed up the volume of NPLs,” a senior chief executive officer of a leading private commercial bank explained.
He also said the rise in the NPLs was also a result of aggressive banking by a section of commercial banks following their excess liquidity.
BBN/SSR/AD