The amount of classified loans in the country's banking system recorded a sharp decline in the final quarter of the calendar year 2014 following rescheduling, write-off and recovery, officials said.
The volume of non-performing loans (NPLs) fell by more than 12 per cent to Tk 501.56 billion in the fourth quarter (Q4) of the last calendar year from Tk 572.91 billion in the preceding quarter, according to the central bank statistics.
During the Q4, the share of NPLs in the total outstanding loans of the banking system came down to 9.69 per cent from 11.60 per cent in the previous quarter.
The classified loans cover substandard, doubtful and bad/loss of total outstanding credits which stood at Tk 5,178.37 billion as on December 31.
"The share of NPLs in the total outstanding loans of the banking system came down to single digit due to strengthening of monitoring and supervision by the central bank using its electronic dash board," SK Sur Chowdhury, deputy governor of the Bangladesh Bank (BB), told the FE Monday.
Rescheduling and write-off under the existing rules and regulations have contributed to reduction of classified loans during the period under review, he explained.
"Favourable socio-economic condition until December last has also helped to bring down the share of NPLs in the total outstanding loans at single digit from the earlier level," the deputy governor claimed.
Most of the banks have been able to reduce their classified loans in the Q4 of 2014 in line with the central bank's advice but many have expressed the fear that it might rise again in the Q1 of this calendar year if the political turmoil persists.
"The fresh loan may enter into the classified territory as borrowers may be unable to repay their instalments properly due to the political unrest," Nurul Amin, Chief Executive Officer and (CEO) and Managing Director (MD) of the Meghna Bank Limited, told the FE.
Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), said: "We're trying to cope with the situation."
The overall business activities experienced a sluggish trend recently following the countrywide blockade and strikes, being enforced by the BNP-led 20-pary alliance.
During the October-December 2014 period, the total amount of classified loans with the four state-owned commercial banks (SoCBs) came down to Tk 164.53 billion from Tk 207.97 billion in the previous quarter.
On the other hand, the total amount of NPLs with 39 private commercial banks (PCBs) stood at Tk 184.26 billion in Q4 against Tk 221.94 billion in Q3.
The classified loans of nine foreign commercial banks (FCBs) rose to Tk 17.06 billion from Tk 16.38 billion.
The NPLs with four development finance institutions (DFIs) surged to Tk 135.70 billion in the Q4 from Tk 126.62 billion in the previous quarter.
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