Abu Sazzad: The bad debt recovery failure by the public banks is turning into further vulnerability which would help increasing non-performing loans (NPLs) as well as squeezing financial health of such category financial institutions.
Country’s state-owned commercial banks (SoCBs) are going to face severe financial irregularities in near future mainly due to ignoring attitude in recovery of the unavoidable bad debt collection target during virus pandemic period.
Nominal classified loan collection is created hindrance the fresh loan disbursement to the entire productive sectors as well as creating hardship to balance total advance and deposit ratio.
Such imbalance financial transactions are forcing the public banks to calculate the growing number of loss branches in the contemporary period which is also putting negative impact on the net income of each bank.
It is to be mentioned that the central bank asked banks not to classify borrowers as defaulters even if they fail to repay loan installments by December 3. Following the directions, all public banks has fixed lower default loan collection target for the whole year. Taking the advantage of this policy to revamp economy from the adverse impact of the virus pandemic, the willful defaulters are deliberately ignoring to repay their monthly installments and banks are forcing to apply write-off policy to reduce the NPL. According to a Daily Industry report, public banks wrote off Tk 15,600 crore in January to June period for clearing their balance sheet.
According to Bangladesh Bank data, the largest public bank namely Sonali Bank has set to recover Tk 250 crore bad debt in the current year, but the bank recovered only Tk 5 crore in the first half (January to June) of the ongoing year which means that only 2 percent target had been achieved in the six months. Meanwhile, the loss-making branches touched some 50 branches from 27 which disclosed that the number of loss-making branch increased by almost 50 percent.
Beside, Janata Bank recovered Tk 2.50 crore against the target worth Tk 1,000 crore which means that the bank had achieved only 0.40 percent recovery. The number of loss-making branches of the said bank stood at 79 numbers as on June this year while it was 50 in December last which mentioned that the number increased by almost 64 percent.
On the other hand, Rupali Bank achieved only 0.42 percent against its annual bad debt recovery target. The bank recovered only Tk 1.50 crore in the first half, but the bad debt collection target was Tk 350 crore. Now, the number of loss-making branches is 16 while it was 11 in December last. The number increased by 68 percent in the six months.
Meanwhile, Agrani Bank collected Tk 6 crore against the annual target worth Tk 200 crore which means that the bank achieved only 3 percent bad loan recovery. The number of loss-making branches is now 78 while it was only 18 as on December last. Riding on this data, it may be said that the number of loss-making branches increased by almost 77 percent.
Agrani Bank Managing Director Mohammad Shamsul Alam said that bad loan recovery process almost halted for the policy relaxation of the central Bank.
“The classified loan recovery process almost halted considering the virus pandemic situation and we are now emphasizing to revamp the business and economic activities instead of recovering the classified amount”, he added.
Former Bangladesh Bank governor Dr Salehuddin Ahmed said that the number of willful defaulters are increasing through taking the advantage of the relax policy to recover bad loan which is going against the economic revamping mechanism.
“Big borrowers are availing all the policy support while that small ones are depriving in getting banking facilities which may increase economic disparity in the country”, he lamented.
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