Unabated rise in NPL and lawsuits

Lawsuits moved for recovery of a staggering size of both public and private banks' default loan amounting to Tk2.07 trillion until March this year are not only a clear indication of a deplorable loan culture this country is heir to but also the dark ingenuity of the coterie that received such loans. Protracted cases of this huge amount in courts have a combined telling impact on both the banking system and the economy of the country. But this amount is not all of the classified loans. The amount of loans allowed to be rescheduled taking advantage of the lax legal provisions stood at about Tk2.3 trillion by the end of 2022. As things stand, the combined size of rescheduled and non-performing loan (NPL) is more than half of the country's total national budget of Tk7.61 trillion for the fiscal year 2023-24. The number of bank loan cases with the court has been going up all the time. Between January and March of this year alone, 14,650 cases were filed by 60 banks with the Artha Rin Adalat (money loan courts) pushing the total number to 214,282. By this time the number may have risen further.

This explains the sorry plight of the banks right now. Sure enough, the banks are to blame to a large extent for extending loans to undeserving candidates. But political pressure or instructions from big bosses of private banks compel bankers to swallow the bitter pills at times. It is a fact that bankers are not always free to take decisions depending on their financial acumen. When boards of private banks are dominated by family members, there are ample opportunities to tinker with banking laws. Some of the notorious scams involving public banks' loans are a result of either exertion of political influence or a collusion between corrupt political elements and a section of bank staff. The Basic Bank scam is a clear example of such an unholy alliance.

Sadly, the nation has to suffer the economic burden and shame of the vicious legacy. Bad loans worth Tk 653.21 billion had to be written off by the end of 2022. Who are the beneficiaries of non-performing loans (NPLs) and bad loans? Certainly not the poor farmers who are paraded with ropes tied around their waist for failing to pay a paltry loan of Tk 5,000-10,000. Remarkably, a High Court bench in its observation made such a comment recently and also chided high-profile lawyers who repeatedly seek deferment of cases involving default loans on behalf of their big but evasive clients.

There is a chance of making losses in business and other entrepreneurships, which leaves loanees with hardly any option other than default on payment. But it is unbelievable that as many as 214,282 loan receivers have been rendered genuine defaulters. A good number of them have sought loans with an ulterior motive right from the beginning and some of them have the dubious distinction of laundering money abroad and purchasing homes in what is sarcastically called Begum Para in Canada and similar other second homes in Malaysia and other countries. Channelling money illegally to banks in tax havens is an open secret. This is exactly how the country is bled white and the intriguing elements skirt around the law of the land courtesy of political and other patronages.