Bangladesh Bank Loans: Record Defaults, Low Investment

Dhaka, Nov 26 (PTI) Non-performing loans in Bangladesh's banking sector jumped to Tk 6.44 lakh crore at the end of September, which amounts to 35.7 per cent of all banking credit, the Central Bank said on Wednesday.

The Bangladesh Bank statement said default loans increased by nearly Tk 3 lakh crore in the first nine months of the current year from Tk 3.45 lakh crore in December last year. (1 USD = 122.41 Tk).

The Central Bank statistics suggested the total default loan rate surged to 35.73 per cent at the end of September from 24 per cent in March.

The total loans in the banking sector stood at Tk 18 lakh crore.

The Business Standard newspaper called the scenario a “historic spike”.

“Bangladesh had never seen such a slump in investment before," Prothom Alo newspaper said in a report.


The Alo analysis said “unrest” and “uncertainty” were the biggest elements which emerged during Muhammad Yunus's interim government, while the energy crisis, high interest rate, high inflation, low wage and decrease of purchasing capacity remained as issues.

"It (addition of two elements) created a lack of trust, resulting in economic lethargy, debarring employment generation,” the report read.

Bangladesh Bureau of Statistics (BBS) calculated in October the inflation rate to be 8.17 per cent, the highest among South Asian nations.

Several entrepreneurs and business leaders, however, said a tightened loan classification rule implemented from March contributed to a massive increase in loan default cases.

The new rule suggested borrowers would be marked classified from the very next day of the payment expiry date.

Bankers said this meant an account would come under classification in three months of non-payment, while previously accounts were classified nine months after the expiry of the instalment payment date.