Top 20 borrowers of the country account for 47 percent of the total Nonperforming Loans (NPLs) in 2019, according to the central Bangladesh Bank (BB) data.
The BB report says Tk 550 billion borrowed by the top borrowers makes up around half of the total NPL in the country’s banking sector. Around 40 banks are at risk due to the large volume of the nonperforming loans.The country’s banking sector is burdened with NPLs of Tk 1162.88 billion as of September last year.
The top 20 clients have remained as loan defaulters for years. In 2018, the top 20 clients also became the top defaulters. They also become defaulter of loans worth Tk 405.16 billion in December 2018.
The banking sector insiders said the entire banking sector is now hostage to a handful of borrowers. They also said interest rates can’t be reduced due to the rising NPLs.
The defaulters include Quantum Power Systems, Samannaj Super Oil, BR Spinning Mills, Suprov Spinning, Rimex Footwear, Rising Steel, Computer Source, Benetex Industries, Max Spinning Mills, SA Oil Refinery, Rubaiya Vegetable Oil Industries Limited, Anowara Spinning Mills, Crescent Leather Products, Suprov Rotor Spinning, Yasir Enterprise, Chowdhury Knitwear, Siddique Traders, Rupali Composite Leatherwear, Alppa Composite Towels and MM Vegetable Oil Products.
Former Deputy Governor of Bangladesh Bank Khondakar Ibrahim Khaled told the Daily Sun that non-performing loans will be reduced only when there is good governance in banks.
“If there is good governance, influential people will also be forced to pay back. And the top 20 customers will only refund when they see that there is no scope of crossing the line. That is why it is important to have good governance in the banking sector,” he said.Till September 2019, the total amount of NPLs with six state-owned commercial banks (SoCBs) rose to Tk 549.22 trillion from Tk 486.96 billion on December 31, 2018.
On the other hand, the total amount of classified loans with private commercial banks (PCBs) rose to Tk 54,574 billion in Q3, from Tk 381.40 billion in the final quarter of the last calendar year. It was Tk 519.24 billion as of June 30 last. The NPLs of foreign commercial banks (FCBs) came down to Tk 20.91 billion in the July-September quarter from Tk 22.88 billion in Q4 of 2018. It was Tk 20.58 billion in Q2 of the current calendar year.
The classified loans with two specialized banks (SBs), increased to Tk 55 billion in September 2019, from Tk 47.88 billion nine months ago. It was Tk 46.99 billion as of June 30 of the current calendar year.
The central bank explained that the amount of NPLs increased slightly in the current calendar year due to an instruction on policy support for loan defaulters and their one-time exit was yet to be fully implemented.