Nonbanks also see a surge in non-performing loans (NPLs) with the aggregate buildup standing over Tk 247.11 billion by latest count till last June.
The volume of NPLs in the financials of non-bank financial institutions (NBFIs accounted for 33 per cent of the sector's total loan portfolio, according to Bangladesh Bank (BB) latest data.
According to the BB, the total loan disbursement in this sector reached over Tk 745.34 billion by the end of June 2024, while non-performing loans increased by Tk 8.22 billion over the previous three months.
Industry-insiders have said both weaker and stronger non-banking financial institutions are now struggling under the burden of defaulted loans, leading to a continuous rise in NPLs in this sector of lending, apart from the banking-sector bad-loan buildups following wanton forgeries.
They point to liquidity crises, fierce competition with banks, and reputational damage due to irregularities as key reasons.
These ills are making it harder for institutions to attract deposits, while borrowers are finding it difficult to repay loans due to poor business conditions.
As of June 2024, the outstanding loans in the non-banking sector stood over Tk 745.34 billion, with Tk 247.11 billion categorised as non-performing, representing 33.15 per cent of total loans.
In comparison, at the end of March 2024, the outstanding loan balance was Tk 743.89 billion, with NPLs amounting to Tk 238.89 billion or 32 per cent of total loans.
Over the past six months, NPLs surged by Tk 31.44 billion, in an increase of 14.57 per cent.
By the end of June, irrecoverable or bad loans had ballooned to Tk 210.33 billion,
accounting for 28.22 per cent of total disbursed loans. This figure was Tk 200 billion at the end of March, making up 26.91 per cent of total loans.
Md. Golam Sarwar Bhuiyan, Managing Director of IIDFC or Industrial and Infrastructure Development Finance Company, told the FE correspondent that "the challenges in the overall economy are contributing to the rise in NPLs, as borrowers are increasingly getting unable to repay their loans on time".
He also points out that some financial institutions, unlike banks, failed to regularise the rescheduled loans, which contributed to the increase in non-performing loans.
