Dhaka, Bangladesh (BBN) – The volume of classified loans in the country’s banking system jumped by 26.38 per cent or BDT 196.08 billion in 2018 despite close monitoring of the central bank.
The non-performing loans (NPLs) rose to BDT 939.11 billion as on December 31, 2018 from BDT 743.03 billion on the same day of 2017, according to the central bank’s latest statistics, released on Tuesday.
It was BDT 621.72 billion as on December 31, 2016.
Official of the central bank said stronger recovery drives by the commercial banks and rescheduling of loans before the last parliament election pushed down the default loans in the final quarter (Q4) of 2018.
During the October-December period of 2018, the classified loans dropped by over 5.0 per cent or BDT 54.59 billion to BDT 939.11 billion from BDT 993.71 billion in the Q3. It was BDT 893.40 billion in the Q2.
“The banks had expedited their recovery drives to improve their balance sheets by the end of the calendar year,” BB spokesperson Md. Serajul Islam explained.
Mr. Islam also an executive director of the central bank said the amount of NPLs dropped in the final quarter of 2018 due to higher recovery before the last election.
“Written off of loans have also helped reducing the volume of NPLs during the period under review,” he noted.
The share of NPLs in the total outstanding loans came down to 10.30 per cent as on December last from 11.45 per cent three months back. It was 9.31 per cent as on December 31, 2017.
The classified loans cover substandard, doubtful and bad/loss of total outstanding credits, which stood at BDT 9,114.30 billion as on December 31 last. The amount was BDT 7,981.96 billion a year ago.
Senior bankers, however, said several loans irregularities particularly in the public banks pushed up the volume of NPLs in the last calendar year.
They also expressed concern that the amount of NPLs might rise in the first quarter (Q1) of the current calendar as inspections are being carried out by the central bank.
During the period under review, the total amount of default loans with the six state-owned commercial banks (SoCBs) rose to BDT 486.96 billion from BDT 373.26 billion a year before. It was BDT 480.80 billion in the Q3 of 2018.
On the other hand, the total amount of NPLs with the 40 private commercial banks (PCBs) reached BDT 381.40 billion as on December 31 last, from BDT 293.96 billion on the same day of 2017. It was BDT 436.67 billion in the Q3 of 2018.
The classified loans of the nine foreign commercial banks (FCBs) rose to BDT 22.88 billion during the period under review, from BDT 21.54 billion a year ago. It was BDT 23.82 billion as on September 30 last year.
The classified loans with the two development-finance institutions (DFIs) also dropped to BDT 47.88 billion as on December 31 last from BDT 54.26 billion a year ago. It was BDT 52.41 billion in the Q3 of 2018.
Talking to the BBN, M A Halim Chowdhury, managing director (MD) and chief executive officer (CEO) of Pubali Bank Limited, said a portion of the restructured large loan has already turned into NPLs.
The central bank had cleared proposals of 11 business groups for restructuring their large loans amounting to around BDT 153.26 billion.
Some loans irregularities have been exposed that has pushed up the aggregate amount of classified loans in the banking system in 2018, the senior banker noted.