Md. Zillur Rahaman: At present, the banking sector of Bangladesh is going through a challenging time and is facing three major challenges. First, the large-scale dormant defaulting loans, second, the implementation of single-digit interest rates, and third, the challenge of the post COVID-19 economic downturn.
Basically, based on the situation in the pre-COVID-19 banking sector, those concerned have to take action considering the COVID-19 period and various issues. Naturally, these functions are not so easy. For the desired success, the question of sincerity, efficiency, competence, competence of all the stakeholders as well as the transparent, ethical, positive attitude of all is essential and for this, the need for systematic and accountable management of the whole process is also seriously considered.
Despite the various challenges, the latest data released from Bangladesh Bank shows that the total loan disbursements of the banks till September 2021 is Tk. 11836.03 billion and the default loan is Tk. 1001.68 billion which is 8.46 percent of the total loan. The default loan has jumped by Tk 56.26 billion in one year.
In fact, the country’s banks are not able to get out of the circle of defaulting loans. Bank default loans are going out of control due to corruption, irregularities, political influence in the disbursement of loans, lack of good governance, loosening of control of the central bank, etc. Analyzing the situation of public and private banks, various negative images emerge. However, the swollen image of default loans is a big omen for the country’s banking sector, business and trade economy.
| ব্যাংক, ব্যাংকার, ব্যাংকিং, অর্থনীতি ও ফাইন্যান্স বিষয়ক গুরুত্বপূর্ণ খবর, প্রতিবেদন, বিশেষ কলাম, বিনিয়োগ/ লোন, ডেবিট কার্ড, ক্রেডিট কার্ড, ফিনটেক, ব্যাংকের নিয়োগ বিজ্ঞপ্তি ও বাংলাদেশ ব্যাংকের সার্কুলারগুলোর আপডেট পেতে আমাদের অফিসিয়াল ফেসবুক পেজ 'ব্যাংকিং নিউজ', ফেসবুক গ্রুপ 'ব্যাংকিং ইনফরমেশন', 'লিংকডইন', 'টেলিগ্রাম চ্যানেল', 'ইন্সটাগ্রাম', 'টুইটার', 'ইউটিউব', 'হোয়াটসঅ্যাপ চ্যানেল' এবং 'গুগল নিউজ'-এ যুক্ত হয়ে সাথে থাকুন। |
According to the latest data from Bangladesh Bank, the lion’s share of default loans belong to state-owned banks. Janata Bank has Tk 138.37 billion which is 14 percent of the total default loan, Sonali Bank’s Tk. 102.94 billion which is 10 percent of the total default loan, Agrani Bank’s Tk. 78.72 billion which is 8 percent of the total default loan, BASIC Bank’s Tk. 76.19 billion which 7.50 percent of the total default loans and the private AB Bank Tk. 53.33 billion, which is 5 percent of the total default loans.
According to the Central Bank, out of the total default loans, the default loans of state-owned commercial banks is Tk 440.16 billion, which is about 44 percent of the total default loans. The default amount of the three specialized banks is Tk 36.99 billion and the others private banks have Tk. 501.55 billion.
There is no doubt that due to the dominance of a handful of dishonest officials and political vicious circle, various irregularities and corruption spread the defaulting loans. If banks could, stop the tendency to default on loans through false information and fraud, then there is a way to avoid risk and this requires ensuring accountability and responsibility.
Lack of accountability has led to large scale loan scams at Sonali Bank, BASIC Bank and some other banks. In our society, the tendency to not pay off debts has become a kind of subculture. The proliferation of defaulting loans is severely weakening the foundations of banks, reduces the efficiency and profit.
When the incumbent government formed the government in 2009, the total default debt in the country was only Tk. 224.81 billion and now it is Tk.1001.68 billion. There was a time when putting money in a bank would double it in just six years. But the depositors no longer have that roar. Debt defaulters have taken that place. As a result, default loans have increased almost five times in just 12 years and if the conceal written-off debt is taken, then it will go close to Taka one and a half trillion.
There is no alternative but to increase the supervision and surveillance over the banks and take strict legal action against the defaulters. If necessary, it is necessary to think about the issue of making strict laws without wasting time. At the same time, if discipline and good governance are not established in the banking sector, the amount of default loans will continue to scale up and this will create a deeper crisis in the future.
In order to settle the case of defaulting loan, it is necessary to have a timely law and also to make arrangements for the settlement of the case by forming a special bench. Only in the Artha Rin court these cases have become difficult to settle in time. Many discussions about defaulting loans are being criticized, but how much work has been done is a question. The government should ensure the security of public deposits as well as consider the banking sector loan safety.
The biggest problem of our country’s banking sector is excessive defaulting loans. However, it is also true that defaulting debt is not the only problem of our country, but it is a global problem. All countries in the world have default loans. Somewhere more, somewhere less. Many are aware of the US subprime mortgage default debt scandal.
The recent spate of bankruptcies in India’s banking sector has taken everyone by surprise. The central bank of India is strong enough and has considerable control and power over the commercial banks. So there was no high interest rate default. Despite many steps being taken in Greece and Italy in Europe, their banking sector is still struggling with defaulting loans.
According to the banking sector, the debt collection of the banks has been declining since the COVID-19 infection. During this time many businesses and manufacturers are unable to sell their products, which reduces their income. As a result, they are unable to repay the loan. Many private sector employees have not been able to repay their individual loans due to declining income. Many people are also in arrears of house loan as their houses are vacant. Naturally default loans are supposed to increase.
Despite the ability of many, Bangladesh Bank is not paying the money on purpose due to laxity. Moreover, the banks have not been able to take any tough steps or legal action to recover the loans. On the other hand, as the court has been closed for a long time, the previous case is also not gaining any momentum. As a result, many defaulting customers are spending their time in comfort.
Md. Zillur Rahaman is a Banker and Freelance Columnist.
