Drives for recovering billions of taka in written-off loans appear sluggish as most of the state-owned banks each month reclaim only a peanut, officials say, while the dud money ballooning.
After the balance sheet is cleaned by writing off the default loans every year, the ba'ks' authorities hardly deploy any special endeavour to recover the money, they add.
Bankers say they try to recover the written-off loans as regular part of their work instead of engaging special efforts.
For example, Agrani Bank Ltd recovered only Tk 10 million in January this year and Tk 39 million in February against its annual target of recovery at Tk 5.20 billion this year.
Until December 2021, the bank had an aggregate amount of Tk 40.45 billion worth of written-off loans.
Sonali Bank Ltd, the largest commercial bank in the country, has a total of Tk 68.277- billion credits washed out from the balance sheet to keep it tidy. The bank has set a target to recover some 10 per cent of the total written-off money amounting to Tk 6.827 billion within this calendar year.
However, during the January-February period, the bank could retrieve only Tk 140 million and Tk 95.83 million respectively.
Data show that banks every year have been witnessing rise in the volume of written-off loans which, sources say, have low possibility to be recovered or the banks themselves have no wish to employ heightened efforts to that end.
Last year, the country's banking sector wrote off some Tk 24.42 billion in bad loans to clean their balance sheet. In 2020 the volume was Tk 9.71 billion, in 2019 some Tk 25.97 billion, and in 2018 they washed up Tk 33.70 billion.
Contacted, Sonali Bank managing director Ataur Rahman Prodhan told the FE that usually only the worst case of loans is being written off as they have almost no hope of recovery.
"But the writing off doesn't mean washing them out," he says, adding that the process remains on to reclaim the money.
Mr Prodhan notes that public-sector banks did not write off loans after 2014 and that now the money is being recovered gradually.
"We keep 100-per cent provision with Bangladesh Bank against the writing-off of loans," he says about the security guarantee against the dud money which is segregated to be recovered beyond scheduled time.
He further clarifies that both small and large loans that have no security coverage or the borrowers died, and some loans have litigation are being written off.
Agrani Bank managing director Mohammad Shams-Ul Islam told the FE that loans which have no more possibility of recovery are only being written off but "those do not go out of our sight".
"We write off the loans to clean the balance sheet," he says, but efforts continue to net those in.
About the recovery process he mentions that employees are given recovery target, and if they can attain it, they are rewarded for the success.
Former governor of Bangladesh Bank Dr Salehuddin Ahmed earlier told the FE that the amount of recovered written-off loans is in no way satisfactory.
"It is unacceptable that banks will reduce their recovery effort once loans are written off," he said and added: "It's a total failure."
Dr Ahmed said the Bangladesh Bank recently lowered the requisite tenure for bad loans to be written off from the balance sheets to three years from the previous five years.
"Bankers take the advantage of the central bank's flexibility and don't put in efforts to recover the written-off loans," he added.
© 2024 - All Rights with The Financial Express
