Dhaka, Bangladesh (BBN) - The default loans in the country’s banking system jumped by nearly 20 per cent or BDT 121.31 billion in 2017 as a major portion of restructured large loans turned into bad debts.
The amount of non-performing loans (NPLs) rose to BDT 743.03 billion as on December 31 last year, from BDT 621.72 billion on the same day of the previous year (2016), according to the central bank’s latest statistics.
It was BDT 513.71 billion as on December 31, 2015.
Stronger recovery drives by the commercial banks and rescheduling of loans pushed down the NPLs in the final quarter (Q4) of the last calendar year, according to the officials and bankers.
They also expressed concern that the amount of NPLs might rise in the first quarter (Q1) of this year due to a sluggish pace in recovery drives by the commercial banks.
During the October-December period of 2017, the NPLs dropped by more than 7.0 per cent or BDT 60.04 billion to BDT 743.03 billion from BDT 803.07 billion in the Q3. It was BDT 741.48 billion in the Q2.
Talking to the BBN, a senior official of the Bangladesh Bank (BB) said the amount of default loans normally falls during the final quarter of each calendar year, as the banks gear up recovery drives to raise their income.
The share of classified loans in the total outstanding loans came down to 9.31 per cent during the period under review from 10.67 per cent three months back. It was 9.23 per cent as on December 31, 2016.
The classified loans cover substandard, doubtful and bad/loss of total outstanding credits, which stood at BDT 7,981.96 billion as on December 31 last. The amount was BDT 6,739.20 billion a year ago.
“The volume of NPLs dropped in the Q4 of last calendar year mainly due to strengthen recovery drives along with rescheduling,” Syed Mahbubur Rahman, Chairman of Association of Bankers, Bangladesh (ABB), explained.
Mr. Rahman, also managing director (MD) and chief executive officer (CEO) of Dhaka Bank Limited, said a major portion of the restructured large loan in 2015 has already turned into bad loan.
The central bank had cleared proposals of 11 business groups for restructuring their large loans amounting to around BDT 153.26 billion.
Echoing Mr. Rahman, M A Halim Chowdhury, MD and CEO of Pubali Bank Limited, said the aggregate amount of NPLs may decrease in 2018, as most of the banks are providing loans with due diligence to avoid risk.
During the period under review, the total amount of NPLs with the six state-owned commercial banks (SoCBs) rose to BDT 373.26 billion from BDT 310.26 billion a year before. It was BDT 385.17 billion in the Q3 of 2017.
On the other hand, the total amount of classified loans with the 40 private commercial banks (PCBs) reached BDT 293.96 billion as on December 31 last, from BDT 230.57 billion on the same day of 2016. It was BDT 339.73 billion in the Q3 of 2017.
The NPLs of the nine foreign commercial banks (FCBs) came down to BDT 21.54 billion during the period under review, from BDT 24.05 billion a year ago. It was BDT 22.98 billion as on September 30 last year.
The classified loans with the two development-finance institutions (DFIs) also dropped to BDT 54.26 billion as on December 31 last from BDT 56.84 billion a year ago. It was BDT 55.18 billion in the Q3 of 2017.
BBN/SSR/AD