Loan write-offs soar | The Daily Star

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.

Among the 12 banks that cleaned up their balance sheets, City Bank topped the list with Tk 207 crore, followed by Tk 108 crore of the Dutch-Bangla Bank and Tk 101 crore of the Eastern Bank, according to the data 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 crore from private banks last June.

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

According to the BB standards, loans are written off after taking the appropriate steps 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 offenders and maintain 100% provisioning.

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

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

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

"Amortized loans are like bad loans.The process of recovery of such a loan is very difficult.So banks should prevent corruption so that the invested quarter does not take loans through the process contrary to the ethic, "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 and write-off loans 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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