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The amount of defaulted loans in the country’s industrial sector increased by Tk 703.83 crore in January-March quarter to reach Tk 45,831.12 crore as of March 30 this year even though the government relaxed policy to lower the figure on paper.
Experts said that the amount would rise further in the coming months not only for the coronavirus-induced economic shocks but also for the absence of good governance in the banking sector that had been becoming more vulnerable gradually.
Instead of bringing the loan defaulters to book, the central bank has been formulating policies that can be mentioned as accounting juggling just to sweep the bank sector ills under the carpet, they said.
According to BB data, the amount of defaulted industrial loans increased to Tk 45,831.12 crore at the end of March this year from Tk 45,127.29 crore at the end of December, 2019.
Experts said that the problems in the sector were so deep even the wholesale policy relaxation failed to keep the volume of bad loans down for a longer period.
The relief for the government and for the central bank lasted only for a quarter that ended on December last year when the volume dropped by Tk 9,288.72 crore from Tk 54,416.01 crore.
‘Policy relaxations defying the international best practices would not be able to bring any positive outcome for the country’s banking sector,’ SANEM executive director Selim Raihan told New Age on Sunday.
Under the policy relaxation introduced on March 16, 2019, the central bank allowed the defaulters to reschedule or regularise their loans with paltry 2 per cent down payment instead of paying 15 per cent.
Unless governance in the sector is improved, the volume of defaulted loans would rise farther, Selim said.
‘Why did the industry sector borrowers fail to repay loans during the January-March quarter when there was no effect of coronavirus outbreak on the country’s economy?’ he questioned.
Selim, also a Dhaka University economics department professor, said that the situation would be grave in the coming days and the banking sector would become more vulnerable day by day.
Apart from huge defaulted loans and stimulus package implementation, the implementation of 9 per cent lending rate ceiling has brought another challenge for the banks, he mentioned.
From April 1 this year, the ceiling on lending rate came into force.
In case of the industrial loan disbursement, the banks preferred large industries to the small and medium ones.
The large industries received Tk 76,123.31 crore in loans from the banks in the January-March quarter, up 9.05 per cent on Tk 69,809.04 crore in the same period in 2019.
Loan disbursement to the small and medium entrepreneurs dropped by 22.3 per cent and 23.23 per cent respectively.
Small industries and medium industries received Tk 7,768.84 crore and Tk 7,769.99 crore respectively in the January-March quarter this year.
