Default loan culture

THIS has reference to a letter captioned "Curbing bad loans" by Asif Ahmed on January 24, 2018 in the Financial Express. I fully agree with the views expressed there and would like to add a few more points considering the ground reality in the banking sector.

Non-performing loan is a major problem in our banking sector and the situation is going from bad to worse with every passing day. A section of influential borrowers are taking loans either through political connections or by doctoring mortgage documents. In some cases, a section of dishonest bankers help them in exchange for kickbacks or under pressure from high-ups in their organisations. These borrowers take added advantage from banks in the form of loan restructuring, reduced interest rates, waiver of interests, moratorium etc by using their connections and in some cases by getting banking rules amended to suit their requirements.

It is a matter of great concern that small borrowers are also being contaminated with bad loan culture of the big borrowers. Such deliberate non-payment of loans is a big challenge before our growing economy. It erodes banks' profits and decreases investment rate of return (IRR) which is crucial for bank's existence. The government should stiffen the existing laws and come down hard on the big borrowers to recover public money.

Md. Zillur Rahaman

Islami Bank Bangladesh Ltd.

Lalmohan Branch, Bhola.

[email protected]