Research firms show bad loans inflated: Governor
Skip to main content
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
The Business Standard

Saturday
January 28, 2023

Sign In
Subscribe
  • Home
  • Economy
    • Aviation
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Fact Check
    • Family
    • Food
    • Game Reviews
    • Good Practices
    • Habitat
    • Humour
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wealth
    • Wellbeing
    • Wheels
  • Epaper
  • More
    • Subscribe
    • Videos
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Games
    • Long Read
    • Interviews
    • Offbeat
    • Podcast
    • Quiz
    • Tech
    • Trial By Trivia
    • Magazine
  • বাংলা
SATURDAY, JANUARY 28, 2023
Research firms show bad loans inflated: Governor

Banking

TBS Report
04 March, 2020, 11:35 pm
Last modified: 04 March, 2020, 11:41 pm

Related News

  • Cash-strapped Islami, Al-Arafah and National turn to Sonali Bank for costly fund
  • UIU, CMED Health sign MoU for research collaboration
  • National Bank needs BB approval to issue loan over Tk10cr
  • Brac University signs Tk450cr loan facility with IDCOL
  • IMF DMD arrives in Dhaka today to finalise $4.5 billion loan

Research firms show bad loans inflated: Governor

Fazle Kabir said different research organisations consider rescheduled and written-off loans as default

TBS Report
04 March, 2020, 11:35 pm
Last modified: 04 March, 2020, 11:41 pm
Research firms show bad loans inflated: Governor

Although the volume of default loans in Bangladesh is proportionally lower than that in many countries in the region, some research organisations are trying to show them as being high, said Bangladesh Bank Governor Fazle Kabir.

Different research firms consider rescheduled and written-off loans as default loans, and thus try to show that there is a high volume of bad loans, he said while addressing the annual conference of Sonali Bank at the Bangabandhu International Conference Centre on Wednesday.

Finance Minister AHM Mustafa Kamal attended the event as chief guest, and Ataur Rahman Prodhan, managing director of the bank, presided over the event.

Fazle Kabir said Bangladesh's default loan is now at 9.32 percent, which is comparatively low in this region. But this figure was higher, at around 11.9 percent in September because of pending cases at the High Court over the special loan rescheduling policy.

He defended that the loan rescheduling is a regular process, and that loans were rescheduled following the rules.

In its Financial Sector Stability Review on Bangladesh, the International Monetary Fund (IMF) commented that the actual size of bad loans is more than double the officially recognised figure.

The figure will be much higher than the official estimate if one takes into account the loans that have remained unclassified by taking a stay order from the High Court, and the rescheduled amount is counted, according to the IMF.

Loans worth a startling Tk50,186 crore were rescheduled in the last one year, more than one-third of them under the latest relaxed offer for defaulters that ended on February 16, to push the total soured loan figure down to a four-year low.

But now the country's total accumulated rescheduled loans, including the last one year's huge amount, stands at Tk65,000 crore.

The December figure says default loans came down to 9.19 percent from a decade-high 12 percent in September that raised concern among economists about the health of the financial sector.

And if this huge volume rescheduled loans are taken into consideration, default loans would shoot up to 16.49 percent of September's total loans. This is exactly what the IMF has recently pointed out.

Global economic growth is already feared to be halved due to an escalation of the coronavirus outbreak, which will also have an impact on the import-export business of Bangladesh, said Ziaul Hasan Siddiqui, chairman of Sonali Bank.

The fall in import-export trade will also put pressure on banks' earnings, he said.

Moreover, interest rate cap is another challenge for continuing income growth because when interest rate is the same for all, banks will have to differentiate themselves by improving service quality, he added.

The Bangladesh Bank recently issued a circular asking all banks to implement single-digit lending rates from April 1.

Siddiqui said Sonali Bank will emphasise the development of technology and human resources to face the challenges.

The bank is planning to introduce mobile financial services and agent banking to diversify the businesses, he added.

Sonali is the first among the state owned banks that will introduce a mobile app on March 17 to give its customers easy access to their accounts, he said.
The non-performing loans of the bank declined to 21.55 percent in December 2019 from above 30 percent in the previous year, the annual report of the bank shows.

The decline in non-performing loans helped the bank reduce capital shortfall to Tk2,056 crore last year from Tk5,032 crore in the previous year.

The special loan rescheduling policy at 2 percent down payment offered by the government helped the bank cut non-performing loans significantly, said Ataur Rahman Prodhan.

He said the bank has reduced Tk3,000 crore default loans under the policy.

The bank made the highest profit among the state-owned banks this year, he said. But it has been making a huge loss from LC (Letter of Credit) opening of government organisations.

Sonali Bank incurred a loss of Tk1,500 crore by opening LCs in favour of government organisations at lower than market price.

The total income of the bank declined slightly by 2 percent to Tk7,683 crore last year, according to annual report of the bank.

The bank has a target to earn Tk8,945 crore this year, 16.42 percent higher than the target last year.

Economy / Top News

BB governor  / loan / research / firms

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Photo: Bloomberg
    India state insurer doubles down on Adani amid short seller row
  • Photo: TBS
    TBS Roundtable: What lies ahead in 2023
  • Photo: BBC
    Hubble telescope captures supermassive black hole 'eating a star'

MOST VIEWED

  • Sonali Bank going to open exchange house in Maldives
    Sonali Bank going to open exchange house in Maldives
  • Infograph: TBS
    State banks spend 80% of their forex for govt imports in H1
  • Cry for dollar for Ramadan imports
    Cry for dollar for Ramadan imports
  • Call money rate hits 7% for first time in over 6 years
    Call money rate hits 7% for first time in over 6 years
  • Bankers' assocs warn banks against buying remittances at higher rates
    Bankers' assocs warn banks against buying remittances at higher rates
  • 54% of annual agri loan target achieved in H1
    54% of annual agri loan target achieved in H1

Related News

  • Cash-strapped Islami, Al-Arafah and National turn to Sonali Bank for costly fund
  • UIU, CMED Health sign MoU for research collaboration
  • National Bank needs BB approval to issue loan over Tk10cr
  • Brac University signs Tk450cr loan facility with IDCOL
  • IMF DMD arrives in Dhaka today to finalise $4.5 billion loan

Features

Snipe in flight. Photo: Enam Ul Haque

Baikka Beel: 'A world where snipe work late'

3h | Panorama
Photo: Noor-A-Alam

Pet cafes: Where love for food and animals cohabit

5h | Food
Illustration: TBS

How MFS is turbocharging national economy

8h | Thoughts
Now is the time to focus on FDI composition

Now is the time to focus on FDI composition

9h | Panorama

More Videos from TBS

Gold covered mummy discovered in Egypt

Gold covered mummy discovered in Egypt

2h | TBS World
Kajol’s road paintings bring change in Gafargaon

Kajol’s road paintings bring change in Gafargaon

1d | TBS Stories
Carew & Company witnessed a remarkable growth

Carew & Company witnessed a remarkable growth

1d | TBS Stories
Gavi may have to leave Camp Nou

Gavi may have to leave Camp Nou

20h | TBS SPORTS

Most Read

1
Picture: Collected
Bangladesh

US Embassy condemns recent incidents of visa fraud

2
Four top bankers arrested in DSA case filed by S Alam group 
Bangladesh

Four top bankers arrested in DSA case filed by S Alam group 

3
Illustration: TBS
Banking

16 banks at risk of capital shortfall if top 3 borrowers default

4
Photo: Collected
Splash

Hansal Mehta responds as Twitter user calls him 'shameless' for making Faraaz

5
A frozen Beyond Burger plant-based patty. Photographer: AKIRA for Bloomberg Businessweek
Bloomberg Special

Fake meat was supposed to save the world. It became just another fad

6
Representational Image
Banking

Cash-strapped Islami, Al-Arafah and National turn to Sonali Bank for costly fund

EMAIL US
[email protected]
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2023
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - [email protected]

For advertisement- [email protected]