Ten Banks Alone Hold 63pc Non-Performing Loans
Top 5 holds 45.8 per cent
Ten banks out of 60 in the country hold 63 percent of all non-performing loans (NPLs), says a Bangladesh Bank (BB). The report styled "Financial Stability Report-2019", was unveiled by the central bank on Wednesday.
Of the 10 banks, four were state owned commercial banks, two state owned specialized banks, three private commercial banks and one foreign commercial bank. The report, however, did not mention the names of the banks. Among the banks, the top five held 45.8 percent of NPLs, it added.
The report also mentioned that the NPL concentration remained high, with 28 percent of the NPLs in the trade and commerce sector, though the sector received only 21.9 percent of the total loans.
The report also said that the high gross NPL ratio of 19.7 percent concentrated in shipbuilding and ship breaking sectors is a major concern. According to the BB, default loans stood at Tk94,313 crore at the end of 2019.
Zahid Hussain, former lead economist of the World Bank's Bangladesh Office, blamed lack of good governance, corruption, political interference in approving loans, and a culture of impunity for the endless and soaring defaulted loans.
"Not only in trade, commerce, and shipbuilding sectors: willful defaulters are abundant in all sectors," he told the journalist. Economists suggested that the government should take strict action against such defaulters.
The coronavirus pandemic is having a negative impact on the country's economy as well as the banking sector, said the report adding the crisis may further intensify soon. The central bank, however has taken several initiatives to slow down the crisis.
The report said that the capital to risk-weighted assets ratio (CRAR) of the banking industry stood at 11.6 percent at end-December 2019, which was 10.5 percent at the end of December 2018. However, the country's banking sector maintained the lowest CRAR in 2019 relative to neighboring countries (India, Pakistan and Sri lanka), it said.
The banking sector's assets reached Tk16, 288.7 billion in calendar year (CY)19, registering a moderate growth of 11.8 percent from that of CY18.
Among the different banking clusters, private commercial banks and state owned specialized banks had higher asset growth compared to CY18 while the rate of growth slowed down in state owned commercial banks and foreign commercial banks, as per the report.