The top 20 defaulters account for 46% – or 32,432 crore Tk – of the total outstanding loans in the banking sector, which is very worrying for the Bank of Bangladesh.
In addition, the recovery of the claims of the first 20 defaulters is mediocre, given the size of the loans in arrears.
In this context, the central bank issued Wednesday a letter addressed to the CEOs of all banks to ask them to set an annual target for recovery of loans from the main defaulters.
These big defaulters played a crucial role in the last volatile situation of the banking sector.
"Banks' recovery measures against the main defaulters are not effective, so banks will have to take further steps to reduce the concentration of default loans," said BB.
Banks were invited to submit their credit recovery return to the BB on a quarterly basis. The BB has also asked the bank management to approve the credit recovery target from their respective board of directors.
In accordance with the Bank Company Act, 1991, bad and bad loans are classified as default loans and sub-standard loans. But the former are also treated as classified loans at times.
A client must be declared in default if he does not pay any loans for six consecutive months.
In September of last year, the total outstanding loans in the banking sector amounted to 72,008 Turkish crores, against 56,957 crores at the end of December 2016, according to the data of the BB.
The central bank has long called on banks to step up recovery of defaulted loans from key defaulters, but it has remained deaf to the ears, said a BB official.
"We had no choice but to publish the last instruction."
The majority of the big bad guys borrowed the loans in violation of the banking norms, while some bank managers and board members helped them too, he added.