Dhaka, Bangladesh (BBN)– The amount of classified loans in Bangladesh’s banking sector jumped by 27.95 per cent in the first nine months of the current calendar year despite close monitoring by the central bank.
The volume of non-performing loans (NPLs) rose to BDT 657.31 billion as on September 30 from BDT 513.71 billion on December 2015. It was BDT 547.08 billion a year before, according to the Bangladesh Bank (BB) latest statistics.
“The NPLs in the banking system increased further because some borrowers did not make repayment of installments against their rescheduled loans,” a BB senior official explained.
He also said the volume of classified loans would fall in the fourth quarter of this calendar year.
However, the amount of classified loans increased by 3.73 per cent to BDT 657.31 billion during the third quarter (Q3) of the current calendar year from BDT 633.65 billion in the preceding quarter, the BB data showed.
The share of classified loans also rose to 10.34 per cent of the total outstanding loans during the period under review from 8.79 per cent nine months before.
The classified bank credits cover substandard, doubtful and bad/loss of total outstanding credits which stood at BDT 6359.87 billion as on September 30 last from BDT 5846.15 billion on December 31. It was BDT 6300.19 billion on June 30, 2016.
During the period, the total amount of NPLs with six state-owned commercial banks (SoCBs) swelled to BDT 299.56 billion from BDT 237. 45 billion as on December 31 last. It was 300.77 billion in the Q2 of this calendar year.
On the other hand, the total amount of classified loans with 39 private commercial banks (PCBs) reached BDT 276.89 billion in the Q3 from BDT 207.60 billion in the final quarter of last year. It was BDT 253.15 billion as on June 30 last.
The NPLs from nine foreign commercial banks (FCBs) rose to BDT 22.69 billion during the period from BDT 18.97 billion in the Q4 of 2015. It was BDT 21.56 billion in the Q2 of this calendar year.
The classified loans with two development-finance institutions (DFIs) rose to BDT 58.17 billion in the Q3 of 2016 from BDT 49.67 billion nine months before. It was BDT 58.17 billion in the Q2 of this calendar year.
Talking to BBN, Nurul Amin, Chief Executive Officer (CEO) and Managing Director (MD) of Meghna Bank Limited, said a portion of special rescheduling loans has already turned into classified ones again mainly for lack of requisite repayment.
Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), hopes that the amount of classified loans would decline in the final quarter of 2016 as the banks have already expedited drive for recovering their classified loans.
BBN/SSR/AD