Banks to form special cell to monitor top defaulters

Banks will form a special cell for monitoring their top defaulters having defaulted loans above Tk100crore in a bid to bring down the volume of bad loans in the sector, according to a draft policy of Bangladesh Bank (BB).

The central bank is going to hold a meeting with eleven banks and related department of the central bank on July 8 to finalize the policy. 

A circular about the policy will then be sent to the chief executives of the banks concerned.

BB’s Banking Regulation and Policy Department (BRPD) will organize the meeting. AKM Ehsan, deputy general manager of BRPD, will chair the meeting.

In March this year, the central bank started working to strictly monitor the top defaulter companies in the banking sector. Recently, the bank sent a letter to different banks asking for more suggestions about the types of initiatives against top defaulters with defaulted loans above Tk100crore.

Banks having a huge volume of defaulted loans have been told to attend this meeting. Eleven banks with four state-owned Sonali, Rupali, Agrani, Janata  would participate in the meeting, said a senior BB official. 

Earlier, Bangladesh Bank (BB) had warned seven banks to reduce their soaring defaulted loans. The seven banks are Sonali, Janata, Agrani, Rupali, National Bank, Islami Bank Bangladesh and Al Arafah.

According to the BB latest data, the non-performing loans (NPLs) of banks rose by a staggering Tk16,962 crore in a period of three months till March this year, increasing the amount of stress loan in the banking sector to Tk1,10,873.54crore, which is the largest ever in the country's history

The bad loan amount was 11.87% of total disbursed loans in the given month, according to the latest Bangladesh Bank (BB) data.

Former Bangladesh Bank governor Salehuddin Ahmed said: “The policies adopted recently by the government and the central bank for banking sector went in the wrong direction. The defaulters were given leverage by these policies. Good borrowers are now feeling discouraged to pay debts.”

The central bank must go tough to reduce the defaulted loans and all the facilities extended to the defaulters should be scrapped, he suggested.

In June this year, Finance Minister AHM Mustafa Kamal revealed the names of the top 300 loan defaulters in the parliament. The top 300 loan defaulters have defaulted loan of Tk50,942 crore at banks. 

The finance minister also provided a list of 14,617 individuals and institutions who have outstanding loans of over Tk five crore since 2009.

These individuals and institutions have sanction limit of Tk1,741,348 crore, outstanding loan of Tk784624 crore, classified amount Tk110541 and defaulted loan Tk100,183 crore.