Rescheduling spree cuts defaulted bank loans by Tk 16,137cr in Q4
2013 defaulted loans decrease by 5pcAKM Zamir Uddin
Defaulted loans in the banking sector decreased by 5.01 per cent in 2013 year-on-year as banks’ rescheduling spree in the last quarter of the year on political consideration brought down the defaulted loans by Tk 16,137.09 crore in only three months.
Bangladesh Bank officials told New Age on Monday that most of the banks went for rescheduling of defaulted loans during the two months before the national elections on January 5.
‘Businesses, mostly loyal to ruling parties, and political leaders went for massive rescheduling of defaulted loans just before the national polls as the tenure of the Awami League-led elections-time government was nearing end,’ said a BB official.
He said many political leaders rescheduled their loans to participate in the national elections while both businesses and banks took the chance to reschedule the defaulted loans to show better performance of their balance sheets.
The central bank, on the other hand, relaxed rescheduling policy for businesses hit by political unrest surrounding elections which ultimately brought down the defaulted loans.
According to the BB data released on Monday, the overall defaulted loans decreased to Tk 40,583.01 crore as of December 31, 2013 from Tk 42,725.51 crore as of December 31, 2012.
But, most staggeringly defaulted loans, which went up to Tk 56,720.10 crore as of September 30, of 2013, declined by 28.45 per cent, or 16,137.09 crore in three months till as of December 31, 2013, showed the BB data.
Former BB governor Salehuddin Ahmed told New Age on Monday that the defaulted loans in the banking sector had decreased in the last quarter of 2013 as the banks had rescheduled their classified loans due to the BB’s relaxed policy.
The BB should increase its monitoring system on the banks so that the scheduled banks recovered the loans after rescheduling.
He feared that the rescheduled loans might convert into defaulted loans if the banks did not take adequate measure in this connection.
Former BB deputy governor Khondker Ibrahim Khaled said that the increasing trend in the defaulted loans usually indicated a good sign for the financial sector, but it was needed more time to make comment in this regard.
‘The defaulted loans declined significantly due to the BB’s relaxed rescheduling policy. It requires six more months for me to see whether the declined defaulted loans will put a positive impact on the economy’, he said.
The defaulted loans stood at 8.93 per cent of the total outstanding loans of Tk 4,54,435.26 crore in the banking sector as of December 31, 2013. It was 10.03 per cent of the total outstanding loans of Tk 4,26,152.79 crore as of December 31, 2012.
Of the total classified loans, those of four state-owned banks decreased by Tk 4,908.65 crore in 2013 from 2012. The classified loans in the SCBs decreased to Tk 16,606.25 crore as of December 31, 2013 from Tk 21,514.90 crore as of December 31, 2012.
The classified loans in the private commercial banks, however rose by Tk 1,280.81 crore in 2013 from 2012. The total classified loans in the PCBs increased to Tk 14,315.66 crore as of December 31, 2013 from Tk 13,034.85 crore as of December 31, 2012.
The classified loans in the four specialised commercial banks rose by Tk 1,027.11 crore in the period. The total classified loans in the banks soared to Tk 8357.56 crore as of December 31, 2013 from Tk 7,330.45 crore as of December 31, 2012.
The classified loans in the nine foreign commercial banks increased by Tk 451.23 crore in 2013 from 2012. The total classified loans in the banks soared to Tk 1,303.55 crore as of December 31, 2013 from Tk 845.32 crore as of December 31, 2012.
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