Dhaka, Bangladesh (BBN) - The amount of classified loans in the country's banking system increased further in the first quarter (Q1) of the current calendar year mainly due to political unrest, bankers said.
The volume of non-performing loans (NPLs) rose by nearly 9.0 per cent to BDT 546.58 billion during the January-March period of this year from BDT 501.56 billion in the preceding quarter. It was Tk 572.91 billion in the Q3 of 2014, according to the central bank latest statistics.
“The central bank is trying to bring down the share of NPLs in the total outstanding loans of the banking system below 10 per cent from the existing level immediately," SK Sur Chowdhury, deputy governor of the Bangladesh Bank (BB), told BBN in Dhaka. “We’ve planned to bring down the share of NPLs to below 5.0 per in future.”
Mr. Sur Chowdhury also said the BB has already asked the banks for strengthening monitoring and supervision so that fresh loans will not turn into classified ones.
Earlier on April 30 last, the BB asked the commercial banks at a bankers' meeting to make sure that the rescheduled loans would not turn classified again and also to take necessary measures to check the tendency of classified loans.
However, the share of troubled loans in the total outstanding loans of the country's banking system crossed double-digit mark again in the Q1 of 2015 despite close monitoring by the central bank.
The share of NPLs rose to 10. 47 per cent during the period under review from 9.69 per cent three months back. It was 11.60 per cent in the Q3 of the last calendar year.
The classified loans cover substandard, doubtful and bad/loss of total outstanding credits which stood at BDT 5222.66 billion as on March 31 last, the BB data showed.
"The amount of classified loans increased slightly in the Q1 of 2015 as various sectors including transport and real estate were affected badly due to political unrest during almost the entire quarter," a senior chief executive officer of a leading commercial bank told BBN.
During the January-March 2015 period, the total amount of NPLs with five state-owned commercial banks (SoCBs) came down to BDT 226.54 billion from BDT 227.63 billion in the previous quarter.
On the other hand, the total amount of classified loans with 39 private commercial banks (PCBs) rose to BDT 227.47 billion in Q1 from BDT 184.26 billion in the previous quarter.
The NPLs of nine foreign commercial banks (FCBs) also rose to Tk 18.39 billion from Tk 17.06 billion.
The classified loans with three development-finance institutions (DFIs) surged to BDT 74.17 billion in the Q1 from BDT 72.60 billion in the Q4 of 2014.