Country's overall business activities experienced a sluggish trend recently following the ongoing political turmoil that may hit the performance of the banks, bankers said.
They also feared that the amount of non-performing loans (NPLs) might increase in the first quarter of this calendar year if the political impasse continues.
"We're worried that the fresh loan may turn into classified one as borrowers are unable to repay their instalments properly due to the political unrest," Nurul Amin, Chief Executive Officer (CEO) and Managing Director (MD) of the Meghna Bank Limited, told the FE Wednesday.
He also said most banks had been able to reduce the amount of NPLs in December last in line with the central bank's advice. "But it may rise in the January-April period of this calendar year if the political turmoil continues."
"We're the first victims of any political turmoil," Mr. Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), observed.
Earlier on December 15 last, the Bangladesh Bank (BB) advised the commercial banks to bring down the NPLs below 10 per cent from the existing level by the end of December, 2014.
The BB's move came against the backdrop of rising trend of the NPLs during the July-September period of the last calendar year as a portion of rescheduled loan turned into classified ones.
The volume of classified loans increased by 11.58 per cent to Tk 572.91 billion in the third quarter (Q3) of 2014 from Tk 513.44 billion in previous quarter of last calendar year.
During the Q3, the share of NPLs in the total outstanding loans of the banking system rose to 11.60 per cent from 10.75 per cent in the previous quarter.
"We expect that the share of NPLs will decrease in the October-December period of 2014," a BB senior official told the FE.
He also said the central bank is working to prepare the classified loan statement for the fourth quarter of the last year.
On the other hand, the overall turnover of banks is squeezing gradually because of prolonged political impasses, according to the bankers.
"Business expansion is almost halted due to political uncertainty," a senior official of a leading private commercial bank (PCB) said adding that most of the businessmen are now following a 'go-slow' policy for minimising risk.
"Fresh opening of letters of credit (LCs), practically for capital machinery, has already started showing a declining trend that may continue in the coming months unless the prevailing confrontational political situation is improved," the private banker observed.
Opening of fresh letters of credit (LCs), generally known as import orders, fell by 7.03 per cent to $3.50 billion in December last from $3.76 billion in November 2014.
The settlement of LCs, generally known as actual import, also decreased by 1.54 per cent to $ 3.21 billion in December, 2014 from $326 billion in the previous month of the last calendar year.
"The country's overall imports decreased slightly in December last as there was a panic of political chaos," another BB official explained.
He also said the overall imports may fall further if the ongoing political uncertainty continues.
Normal cash transactions in the country's banking system may hamper if the countrywide blockade, enforced by the BNP-led 20-pary alliance, deteriorates further, the private banker added.
BNP chairperson Khaleda Zia called the indefinite blockade from January 5 as the government did not allow her party and its allies to hold a rally in the capital Dhaka.
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