Almost one-third of state-owned commercial banks‍‍` loans turn default

Bangladesh‍‍`s total classified loans stood at Tk2,11,391 crore till June 2024.

Bangladesh Bank‍‍`s (BB) latest update on the loan disbursement situation shows that the banking sector disbursed a total of Tk 16,83,396 crore till June 2024. Of which Tk2,11,391 crore or 12.56 percent of loans became defaulted.

Default loans in the banking sector of Bangladesh hit an all-time high of Tk 182,295 crore in the March quarter of this year. Then it was 11.11 percent of the total disbursed loans.

Subsequently, defaulted loans increased by Tk 29096 crore in the span of three months April to June of 2024.

However, the defaulted loans was only Tk 22,000 crore in 2009 when the last Awami League regime assumed power, ruling for the next 15 years.

Among the defaulted loans, state-owned 6 commercial banks’ defaulted loans reached Tk 1,02,483 crore. The defaulted loans in the state-owned banks have remained very risky, and they represent 32.77 percent, or one-third, of the total loans disbursed by these banks. The global lender IMF gave conditions to decrease these banks’ defaulted loans to a reasonable level.

The state-owned two specialized banks- Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank (RAKUB) defaulted loans stood at Tk 5,756 crore or 13.11 percent of disbursed loans.

The defaulted loans of 42 private commercial banks stood at Tk 99,921 crore or 7.94 percent of total disbursed loans. This is not considered very risky.

The defaulted loans of 9 foreign banks stood at Tk 3229 crore or 4.74 percent of their total disbursed loans.

After forming the interim government on August 8, 2024, former IMF economist Dr. Ahsan H, Mansur has been appointed as the governor of the central bank. He has started a massive reform activity in the banking sector.

He abolished a dozen banks‍‍` boards of directors on allegations of disbursing huge loans based on fake and false information, which is the reason for soaring bad loans at record highs.

Among the big defaulted are Chottogram-based S Alam Group and Beximco Group. S Alam group controlled 9 Shariah-based Islami banks and now is facing an investigation of laundering around Tk1.13 lakh crore from these 9 banks including Islami Bank Bangladesh, the largest in Bangladesh.