NPLs rise by 6,351C in Q1'21

Non-performing loans (NPLs) in the country’s banking sector rose by Tk6,351.29 crore during the first quarter of 2021 as the clients were unable to pay in the midst of the economic downturn from Covid-19. 

At the end of March this year, the defaulted loans of the banking sector stood at Tk95,085.35 crore, which was 8.07% of the total outstanding loans of the sector, as per the latest data from Bangladesh Bank.

Bad loans were at Tk88,734.06 crore or 7.66% of the total outstanding loans in three month earlier.

Default loans went down last year as the central bank offered a loan moratorium facility on installments for all kinds of clients. But this year, the facility has been offered for specific sectors on the basis of bank-customer relationships.

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Generally, NPL drops in the last quarter every year to make the balance sheet look good, but it rises in the first quarter, said a high official of the central bank seeking anonymity.

"We did not extend the deferral facility for bad customers, which was one of the reasons for the increasing trend of NPLs," said Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank.

He estimated that the bad loans will increase in the second quarter as well.

Echoing Rahman, Bank Asia managing director Arfan Ali also said that the default loans will increase further in the upcoming days when the central bank withdraws the deferral facility to repay the installments of loans.

He said that now there is reluctance among the customers to repay the loans, however the ability to repay the loans of most of the clients dropped owing to the ongoing depressed situation of the country’s business and economy.

The central bank prepared the statement of default loans by calculating the credits disbursed by the domestic and offshore banking units (OBUs) of banks operating in the country from last December quarter. Previously, the statement was based only on the loans given by the local branches.

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Defaulted loans in state-run banks, which have historically been sitting on a heaving pile of bad credit, rose 2.78% to Tk43,450.61 crore till March from three months earlier.

The 41 private banks held defaulted loans amounting to Tk45,090.30 crore at the end of December, rose 11.71% from a quarter earlier.

The nine foreign banks' bad loans stood at Tk2,458.43 crore, up from Tk2,038.12 crore in three months earlier.

The three specialized state banks defaulted loans stood at Tk4,086.02 crore, up from at Tk4,061.59 crore, as per the central bank latest data.

The loans that were rescheduled last year have gone unpaid again and some loans have newly classified in the first quarter, which was the reason behind the rising trend of non-performing loans during the quarter, said Dhaka Bank managing director Emranul Huq.