Banks' non-performing loan (NPL) buildup ballooned nearly 18.2 per cent to over Tk 1.56 trillion in June over March-end period, sources say, although the real burden would be heavier with rescheduled and written-off credits apportioned through 'window-dressing'.
Bankers and economists say the pressure on the banking sector continued mounting under the load of NPLs or classified loans which weakened the financial health of the key financial sector.
In fact, they say, the actual size of the stress assets in banks would be much higher than the NPL amount if the volumes of loan rescheduling and write-off are taken into account.
The Bangladesh Bank sources said the overall NPL rose to 10.11 per cent of the total outstanding loans that stood at Tk 15.42 trillion as of June last.
With this latest surge, the overall ratio of non-performing loans or classified loans stood at 10.11 per cent - 1.31 percentage points higher than the March period.
In terms of the category of banks, the volume of classified loans in the state-owned commercial banks (SCBs) usually remained high in total outstanding. However, the detailed statistics relating to the NPLs could not be found until filing this report at 10 pm on Sunday.
Seeking anonymity, a central banker said a fall in banks' deposit growth and liquidity tightness due to buying a substantial amount of US dollars from the central bank to settle their overseas transactions threw the commercial banks under pressure.
"And the rise in NPL volume has certainly intensified the stress further."
He said it is not a good sign for the economy and both the central bank and commercial banks need to further strengthen their monitoring to stem default loans from growing.
Contacted, former lead economist at the World Bank's Dhaka office Dr. Zahid Hussain said the current data of NPL that BB normally releases are a part of the stress assets.
If the amounts of loan rescheduling and write-off are taken into consideration, the overall volume of stress assets could go up further.
He stressed the need for seriously strengthening the corporate governance in banks.
Dr. M Masrur Reaz, chairman of the Policy Exchange of Bangladesh told the FE that many business enterprises remain under pressure as a result of the volatility in foreign exchange market.
He, however, said good governance in the state-owned banks which contribute much to the overall NPLs should be strengthened.
jasimharoon@yahoo.com
