Saturday, July 13, 2024

Six state banks face challenges in recovering written-off debts

State-Owned Banks in Bangladesh Struggle to Recover Written-Off Loans: Former Central Bank Governor Accuses Bankers

Title: The State of Loan Recovery in Bangladesh: A Closer Look at State-Owned Commercial Banks

In a recent report by Bangladesh Bank, it was revealed that six state-owned commercial banks in Bangladesh have struggled to recover their written-off loans during the first quarter of the current calendar year. This data sheds light on the challenges faced by these banks in managing their loan portfolios and highlights the need for stronger loan recovery efforts.

The six state-owned commercial banks in question are Sonali Bank, Bangladesh Development Bank Limited (BDBL), Basic Bank, Agrani Bank, Janata Bank, and Rupali Bank. While Rupali Bank managed to collect 53.86% of its target during the first three months, the other banks fell short, with Sonali Bank only recovering 0.8% of its target.

Former Bangladesh Bank governor Salehuddin Ahmed has criticized bankers at state-owned banks for their lack of seriousness in collecting written-off loans. He pointed out that many borrowers from these banks are influential individuals who often fail to repay their loans, leading to a high volume of non-performing loans (NPLs) and eventual write-offs.

The total amount of written-off loans by state-owned commercial banks was reported to be Tk 181.17 billion in March 2024, down slightly from the previous year. However, the overall NPLs in these banks stood at Tk 858.70 billion, indicating a significant challenge in managing bad debts.

The Bangladesh Bank has been proactive in addressing the issue of bad debts in the banking sector, issuing directives to state-owned commercial banks to improve their loan recovery efforts. The central bank has also relaxed its loan write-off policy to allow banks to write off defaulted loans categorized as bad or loss for two years, down from the previous requirement of three years.

In a high-level meeting chaired by the Financial Institutions Division (FID) secretary, state-owned commercial banks were instructed to take strong action to reduce the burden of NPLs and written-off loans. The authorities are concerned about the rising amount of bad debts in the banking sector and are urging banks to prioritize loan recovery.

Overall, the state of loan recovery in Bangladesh’s state-owned commercial banks highlights the need for stronger measures to address the issue of non-performing loans and improve the financial health of these institutions. With the support of regulatory bodies like Bangladesh Bank and a concerted effort from bankers, there is hope for a more sustainable and stable banking sector in the future.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. The content is based on general research and may not be accurate, reliable, or up-to-date. Before making any financial decisions, it is recommended to consult with a professional financial advisor or conduct thorough research to verify the accuracy of the information presented. The author and publisher disclaim any liability for any financial losses or damages incurred as a result of relying on the information provided in this article. Readers are encouraged to independently verify the facts and information before making any financial decisions.

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