The volume of non-performing loans (NPLs) of the country's non-banking financial institutions (NBFIs) shot up by nearly 52 per cent in the first half (H1) of the current calendar year, mainly due to poor recovery, officials said.
The amount of NPLs rose to Tk 30 billion as on June 30, 2015, from Tk 19.74 billion on December 31, 2014, according to the central bank's latest statistics.
However, the share of classified loans in the total outstanding loans of the sector stood at 7.60 per cent till June, from 5.30 per cent till December despite the central bank's close monitoring.
The NBFIs' total outstanding loans of rose to Tk 410 billion in June 2015 from Tk 373 billion in December 2014.
"We've already instructed the NBFIs to reduce the amount of their classified loans through expediting recovery drives," M Mahfuzur Rahman, executive director of Bangladesh Bank (BB), told the FE on Monday.
He said the central bank has also asked the NBFIs for strengthening their monitoring and supervision, so that fresh loans do not turn into classified ones.
"We expect that the amount of classified loans will decrease by the end of this calendar year."
Normally loan recovery increases in December each year, he explained.
Talking to the FE, another BB official said the central bank has already appointed observers to two NBFIs for improving their financial health through recovering NPLs.
"We're continuously checking the NBFIs' financial health by applying different tools," the central banker noted.
Echoing the BB officials' views, Asad Khan, chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), also said the NBFIs' classified loans will come down by the end of 2015.
"We've already boosted our recovery drives through intensifying monitoring and supervision in line with the BB's instructions."
He also said most of the NBFIs are now focusing on existing loans or leases instead of new ones for minimising their risks.
"The amount of classified loans increased in first half of the calendar year, as overall economic activities were affected due to political unrest durig almost the entire first quqrter of this year," said Selim R F Hussain, vice chairman of BLFCA.
Currently, 31 NBFIs run their operations across the country.
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