BB warns public sector banks over defaulted loans

Bangla Tribune Desk
Published : 10:23, Jun 12, 2019 | Updated : 10:24, Jun 12, 2019

Bangladesh BankThe central bank has warned eight state-owned banks to bring down their soaring defaulted loans.
In an urgent meeting on Tuesday (Jun 11), the Bangladesh Bank has ordered top officials of Sonali, Janata, Agrani, Rupali, BASIC, BDBL, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank to roll up their sleeves to cut down bad debts.
According to latest figures by the central, more than 52% of the defaulted loans were with eight state-owned banks. As of this March, the eight banks had Tk 586.67 billion in defaulted loans.
Bangladesh Bank governor Fazle Kabir chaired the meeting attended by managing directors of the state-owned banks, except for the Rajshahi Krishi Unnayan Bank.
“The governor wanted to know why defaulted loans had shot abnormally as of March this year. He asked them to bring down their defaulted loans without any delay,” Bangladesh Bank spokesman Md. Serajul Islam told Dhaka Tribune.
Top officials of the state-owned banks assured that they would undertake attempts to reduce the amount of defaulted loans in the June quarter, added Islam, an executive director at the central bank.
A managing director of a state-owned bank said that, "the non-performing loans (NPLs) in our banking sector typically increases in the first quarter of every year. These NPLs will reduce in the June quarter,” he hoped.
As of March this year, the non-performing loans (NPLs) of the country’s banking sector stood at Tk 1,108.73 billion, the highest ever in the country.
The recent policies adopted for the banking sector went in the wrong direction, according to Salehuddin Ahmed, a former central bank chief.
“The defaulters were given leverage by these policies. Good borrowers are now feeling discouraged to pay debts,” he said.
The central bank must be rigorous to reduce the default loans and all the facilities extended to the defaulters should be scrapped, said Ahmed.