The volume of non-performing loans (NPL) of the Karmasangsthan Bank swelled by nearly 60 per cent to Tk 608.4 million in the last financial year (FY-2013-14) compared to that of the previous fiscal.
According to the central bank sources, the NPL amounting to Tk 608.4 million is 9.75 per cent of the total outstanding loan of the bank in the last FY which was Tk 385.8 million or 6.48 per cent in FY 2012-13 and Tk 288.5 million or 5.42 per cent in the FY 2011-12.
Officials at the central bank and Karmasangsthan Bank (KB) attributed the sharp rise in NPL to disbursement of credit without CIB report, improper utilisation of fund and quality judgment of the loans.
Bangladesh Bank (BB) officials said in a probe report, prepared recently, that since CIB report is not a mandatory one for the KB in the case of loan sanctioning, poor assessment of loan proposals has been rampant. This has resulted in the rise of classified loans over the years.
"Non-use of CIB report results in turning the loans into classified ones. Sometimes, a borrower who has defaulted on payment of loans from other banks and financial institutions manage loans from the KB. There are little chances of getting back such loans," a high official of BB told the FE preferring anonymity.
The BB official said they will soon have talks with the KB officials regarding introduction of the CIB report.
"The central bank is now mulling over making the Credit Information Bureau (CIB) report mandatory, prior to disbursement of any loans further."
However, a KB official said that introduction of CIB report may not be possible in KB as small borrowers neither can obtain report from the central bank nor can provide enough papers relating to other small loans if they make query.
The KB high official also noted that his bank is a specialised financial institute and the central bank's regulations are not obligatory for it.
He also said the bank in the last FY had made a qualitative judgment of loans and scrutinised all the doubtful loans individually and then declared the names of the borrowers those did not make repayment since FY-2011-12 which increased NPL of the bank significantly in last FY.
"We have tried to recover the loans for the last three years but failed and finally declared those as non performing ones," the KB official said.
He, however, also said the bank has taken a special initiative to recover the fund and is hopeful to reap a positive result in the current FY.
Meanwhile, the bank under the guidance of the ministry of finance is executing a cluster of credit programmes to assist entrepreneurs for the development of agro-based industries.
Under the patronage of the ministry of labour and employment, the bank is providing the credit facilities without security among the self-retired and or retrenched workers and employees.
Another special programme for eradication of hazardous child labour in the country has been launched by the KB under the patronage of the ministry of labour and employment.
The bank official also informed that special programmes have also worsened NPL scenario as the bank in most of the cases fails to track the floating borrowers.
The KB has provided credit facilities without security to the parents of 5,000 child labourers.
Established in 1998, the bank has so far provided loans worth Tk 12.11 billion to 222,670 clients and this credit support has created employment opportunities for more than eight lakh people across the country.
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