Bank Loan of Bangladesh in 2017 write-offs soar



Banks wrote off Tk 452 crore in the three months to June last year, up more than 18 times from Tsh 24.76 crore in the previous three months.

Of the 12 banks that cleaned up their balance sheets, City Bank topped Tk 207 crore, followed by Tk 108 crore from Dutch-Bangla Bank and Tk 101 crore from Eastern Bank, according to data from the Bank of Bangladesh published recently

With the last update, the total loans written off between January 2003 and June 2017 amounted to 45,527 crores Tk. Of this amount, 78% remained outstanding, which means that banks' efforts to recover the loans have not paid off.

State banks wrote off 22,435 crores of loans and 21,674 crores of private banks last June.

Two state-run specialized banks, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, have written off Tk 555 crore and foreign commercial banks Tk 863 crore.

According to BB standards, loans are written off after having made adequate arrangements to benefit from the tax benefits. But banks are forced to continue their recovery efforts.

For write-offs, banks must sue the money lending court (Artha Rin Adalat) against the defaulters and maintain a 100% provisioning.

Khondkar Ibrahim Khaled, a former vice governor of the central bank, told the Daily Star yesterday that, by borrowing bank loans, unscrupulous people had siphoned money.

Subsequently, the banks were forced to cancel the loans to conceal the corruption, he said.

The central bank introduced a policy in 2003 to reduce the amount of outstanding loans on banks' balance sheets, Khaled said.

"Discounted loans are like bad loans.The process of recovering such a loan is very difficult.So, banks should prevent corruption so that the invested quarter does not take out loans through the an unethical process, "he said.

BB data show that default loans rose from Tk 6.159 crores to Tk 80.307 crores in September of last year compared with the figure of one quarter ago.

The total amount of default loans and write-offs was more than 1.16 million lakh peaks at the end of June.

Helal Ahmed Chowdhury, former managing director of Pubali Bank, said banks should strengthen monitoring of the process of recovering loans written off.

This type of loans will be recovered as soon as possible if the banks strengthen their judicial process to resolve the cases with the money lending court, he said.



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