As per the latest information of Bangladesh Bank, till September 2018, banks have abolished Tk 497.45 billion default loan.

Of this, state owned banks struck off Tk 200 billion default loans. An MD of a bank told Bangla Tribune, “When a large amount of loan is not recovered, a section of the bad loan is separated from the bank’s main account. In order to show the clients that the bank is in robust health, a section of that bad loan is abolished.”

This is done following banking rules, he added.

According to central bank’s report, at the end of September, state owned bank, Sonali abolished Tk 84.29 billion, Agrani Tk 54.40 billion, Janata Tk 49.85 billion and Rupali Tk 10.19 billion.

Other banks have abolished Tk 298.72 billion.

Former governor of Bangladesh Bank, Dr. Salehuddin Ahmed told Bangla Tribune, “If people who take loans return the money on time then banks would not have to resort to abolition.”

Since a section of unscrupulous businessmen taken money with an intention of not returning it, banks are forced to resort to separate through classification and abolition, he added.

“Bad loans are impediments for banks and a one hundred per cent provision has to be kept against sick loans.”

We must come out of the culture of not returning loans, he stressed.

Central bank says, in the last five years, abolition has risen by 120 percent for Janata Bank, which is Tk 22.72 billion; in 2013, the abolished amount was Tk 22.63 billion which has become Tk 49.85 billion in September 2018. 

A Sonali Bank official says, “We have been abolishing since 2003 following central bank’s policy and for this, cases have to be lodged and banks need to have one hundred per cent security saving provisions.”

However, loans up to Tk 50,000 can be abolished without lodging a legal case.

As per central bank account, the default loan in 2013 was Tk 567.2 billion which stood at Tk 993.7 bllionin September 2018.

Reportedly, 12 commercial banks cannot maintain the mandatory provision against bad loans. Of these banks, four are in government and eight are in the private sector.