This letter is in reference to a report titled "Classified loans cross Tk. 1.00 trillion mark" and published in the Financial Express on June 11, 2019. The report stated that non-performing loans (NPLs) has soared up 25 per cent in first quarter of 2019 compared to the same period of last year and 18 per cent more than the preceding quarter. It is true that the lion's share of the NPLs can be attributed to the State-owned Commercial Banks (SCBs) and it has piled up due to some big loan scams. This is indeed a very alarming situation for the banking sector of the country.
In recent times loan default, especially in the SCBs, has become a hot topic of discussions in academic circles, among policy-makers, politicians and bankers and in the media. This is because the banking system is linked with investment, economic growth, employment generation and poverty alleviation. The strength of these factors is inextricably connected with the financial soundness of the banking system. But the banking industry of Bangladesh is currently under tremendous stress.
Following are the causes behind the growing number of NPLs: (1) Lack of competence and know-how of bank personnel, (2) Poor governance in the banking system, (3) Political influence to sanction loans and (4) Slow pace in recovering bad loans.
The remedies for these are: (1) improvement of professional know-how of the bankers, (2) establishment of proper corporate governance, (3) stopping political interference and (4) amendment to some laws and quick disposal of loan default cases.
It is time the government sent a clear message to loan defaulters. It should be made clear that they can no longer take advantage of the banking system in the country.
Md. Zillur Rahaman
Satish Sarker Road,