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Twenty-five banks are suffering from a collective default loan of Tk 974.4 crore after several non-bank financial institutions (NBFIs) failed to pay back funds despite maturity, in another sign of feeble state in the financial industry.
The fragility of the NBFI sector came to the fore three to four years ago after it emerged that some scammers had siphoned off a huge of funds from the companies in the name of loans. Now, NBFIs are failing to repay banks and individuals although funds have matured.
The figure of default loans came to light after the Bangladesh Bank ordered banks to send the data of the loans disbursed to NBFI and deposits kept with them.
The banks furnished the BB with data as of March last year.
Top bankers say that the NPL figure is much higher than the amount reported by banks as the BB had earlier asked them not to classify the funds despite their inability of NBFIs to repay on time.
The central bank move aimed at keeping the public confidence in the NBFIs intact.
Banks feel comfort in parking funds at NBFIs as the latter own licences from the central bank to do banking, such as disbursing loans to borrowers and mobilising funds from depositors.
Banks have funds of Tk 29,223 crore with NBFIs, either in the form of loans or deposits, according to BB data.
Prashanta Kumar Halder, also known as PK Halder, who is believed to be living in Canada after fleeing from Bangladesh, is one of the people responsible for the ongoing vulnerable situation of the NBFI sector.
Halder, a former managing director of NRB Global Bank and Reliance Finance, and his associates swindled around Tk 4,000 crore to Tk 5,000 crore from four NBFIs: International Leasing and Financial Services Ltd (ILFSL), FAS Finance & Investment, People’s Leasing and Financial Services Ltd (PLFSL), and Reliance Finance.
Md Abdus Salam Azad, managing director of Janata Bank, says it is in a difficult situation to realise the fund amounting to Tk 54 crore given out to First Finance, FAS Finance, and PLFSL.
“We earlier applied to the central bank to file lawsuits against them, but failed to get the approval. The BB even asked not to classify the fund.”
“How would then the bank recover the fund?
BASIC Bank faced a defaulted loan of Tk 111.2 crore disbursed to FAS Finance, ILFSL and Bangladesh Industrial Finance Company (BIFC), said a senior official of the state-run lender.
He, however, said the amount of default loans had recently decreased to some extent as the bank had rescheduled some of the NPLs.
Dutch-Bangla Bank Ltd (DBBL) is also struggling to get back funds amounting to Tk 109.4 crore from several NBFIs.
Abul Kashem Md Shirin, managing director of the bank, says that the lender had earlier filed cases with courts as part of its efforts to retrieve the fund. The bank also rescheduled some of the default loans.
Bangladesh Development Bank has found it difficult to recover loans of Tk 97.7 crore from BIFC, ILFSL and PLFSL, said Managing Director Kazi Alamgir.
He said the total funds disbursed to the NBFIs have now increased to Tk 111 crore, including interests.
Mercantile Bank has been in a quagmire for a long to collect funds worth Tk 47.1 crore from several NBFIs, including BIFC, ILFSL and FAS Finance.
Mati Ul Hasan, additional managing director of the bank, says the lender has regularised some of the loans by accepting a down payment that is lower than the mandatory amount with prior approval from the central bank.
Mamoon Mahmood Shah, managing director of NRB Bank, said that the lender had tried to reschedule the NPLs by offering a lower down payment, but the effort was futile.
The bank faces a bad loan of Tk 45.2 crore disbursed to some NBFIs.
According to Syed Mahbubur Rahman, managing director of Mutual Trust Bank, it is not possible to recover funds overnight as the NBFIs are under stress.
The bank is now giving all-out efforts to recover Tk 33.3 crore.
Md Shafiul Azam, managing director of Modhumoti Bank, suggests a concerted effort to recover the default loans. The bank has Tk 30 crore stuck with the NBFIs.
Contacted, Mominul Islam, chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA), a platform of managing directors of NBFIs, says at least seven NBFIs are passing difficult times.
The BB, the Bangladesh Securities and Exchange Commission and the BLFCA should explore ways to restore the image of the NBFI sector, he said.
“We have recently submitted a set of proposals to the central bank to find out a solution so that the beleaguered NBFIs can make a turnaround.”
Deposits kept by many individuals with NBFIs have also been stuck as well, said Islam, also the managing director of IPDC Finance.
NPLs with the country’s 34 NBFIs stood at Tk 11,757 crore as of September, up 17 per cent nine months ago.
Salehuddin Ahmed, a former Bangladesh Bank governor, says the central bank can hardly do anything in a true sense at the moment to recover the money as the health of the NBFIs is weak.
“Corruption has gripped them,” he said, urging the BB to take stringent measures to restore corporate governance.
The treasury departments of banks should have also been cautious before the funds were disbursed, he said.
Muhammad Ali Zaryab, managing director of Fareast Finance, said that the NBFI had already rescheduled its default loans held at 20 banks, except DBBL.
“We repaid Tk 28 crore to the banks between August and December last year.”
Subash Chandra Moulick, managing director of Premier Leasing, says his company is repaying in phases as it can’t pay back in big amounts.
AKM Ashfaqur Rahman Chowdhury, acting managing director of BIFC, says they will be able to repay if they can recover default loans from borrowers.
“We are trying to provide funds to banks in instalments. We have taken legal actions against defaulters,” said Pritish Kumar Sarker, managing director of FAS Finance.
(TDS)
