Reforms, absence of political interference seen as reasons; loans with pvt banks rise
Rejaul Karim Byron
Defaulted loans with state-owned banks (SoBs) decreased for the first time last year because of absence of political interference and reforms initiated by the immediate past caretaker government in the last two years.
However, default loans with the private, foreign and specialised banks went up significantly following their aggressive banking during the same period.
A high official of Bangladesh Bank said the increase in default loans of private commercial banks is a bad sign as they provide 61 per cent of the total loans.
According to Bangladesh Bank statistics, default loans with the SoBs dropped by 7.44 per cent on December 31, 2008 compared to the previous year while default loans with private, foreign and specialised banks increased by 10 per cent during the period.
Default loans with private banks rose by 15.78 per cent, foreign commercial banks by 47 per cent and specialised banks by 0.43 per cent.
However, the overall default loans with all types of banks stood at Tk 22,481 crore or 10.79 per cent of their outstanding loans on December 2008 while it was Tk 22,624 crore or 13 per cent in December 2007.
“A good number of private banks are doing aggressive banking,” said a central bank official. Bangladesh Bank expressed its concern over the high credit growth after 18 private banks out of 30 registered 30 to 61 per cent credit growth last year. .
Huge amounts of loan have been disbursed in consumer goods sector. In September 2008 loans for consumer goods including motorbike, refrigerator and credit card rose from 31 per cent to 2,300 per cent compared to September 2007.
A Bangladesh Bank official said they were closely monitoring the credit growth and hoped it would come down.
Referring to the decrease in default loans with the SoBs, Bangladesh Bank said default loans in the SoBs fell due to reforms and absence of political interference in the last two years.
In December 2008, default loans with SoBs stood at Tk 12,764 crore or 25.44 per cent of the outstanding loans while it was Tk 13,791 crore or 29.87 per cent in December 2007.
Default loan with private commercial banks (PCBs) in December 2008 was Tk 5,698 crore or 4.44 per cent of the outstanding loans whereas it was Tk 4,921 crore or 5.01 per cent in December 2007.
In December 2008, default loan with foreign commercial banks (FCBs) stood at Tk 286 crore or 1.90 per cent of the outstanding loan while it was Tk 194 crore or 1.49 per cent in December 2007.
Default loans with specialised banks in December 2008 was Tk 3,732 crore or 25.45 per cent of the outstanding loan whereas it was Tk 3,716 crore or 28.58 per cent in December 2007.
Courtesy of www.thedailystar.net
