SCBs in dire straits
THE staggering increase in defaulted loan in the industrial sector in the last fiscal year, compared with that of 2011-12, tends to highlight the precarious condition that the banking sector in general and the state-owned banks in particular are currently in. As New Age reported on Tuesday, quoting Bangladesh Bank statistics, defaulted industrial loan totalled Tk 15,553 crore in 2012-13, up 79 per cent from Tk 8,686.50 crore in 2011-12. Meanwhile, defaulted industrial term loan has also registered an 81 per cent growth in 2012-13 against 9.43 per cent in 2011-12. Moreover, the state-owned commercial and specialised banks respectively shared 44.13 per cent and 10.17 per cent of the total defaulted industrial loans in 2012-13, while the private commercial banks 38.26 per cent.
Apparently because of the prevailing power and energy woes, many corporate entities have failed to pay instalments on their loans in time for 2012-13 as well. But it can in no way explain the huge and abrupt rise in the classified loans in just one year. In this context, there are hardly any reasons to differ with BB officials who pointed out that a large amount of industrial loans has been disbursed in the period in an unlawful manner and under political pressure. It is also most likely that a significant amount of such loans has been used for anything but industrial purposes. In this connection, one can refer to the much-talked-about financial scams in which the little known Hallmark Group and Bismillah Group swindled Sonali and Janata banks of thousands of crores of takas in collusion of a section of top bank officials handpicked by the government on partisan consideration. Reports have it that most part of that swindled money is unlikely to be recovered in any way.
The overall condition appears to make a mockery of the claim made more often not by key functionaries of the Awami League-led government that they have managed the economy better than their predecessors. Experts unanimously suggest that it is essential to ensure accountability in the management of the SCBs and other banking institutions, something absent under the current regime in particular, to end loan default culture. At the same time, the incumbents need to take serious steps to recover the classified loans without any delay.
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