Banks' default loans

Default loans with the country's commercial banks reached Tk 1.25 trillion at the end of June this year. This is not good news. Even three months ago, the amount was Tk 1.13 trillion. Various newspapers' reports suggest that the surge was due to relaxation in loan repayments for big borrowers. These borrowers are allowed to delay their due loans. The Bangladesh Bank has devised a new rule in this connection. As a result, many defaulters now think that if they do not pay the loan, they will get more discounts in the future. Many defaulters also do not repay loans, citing the pandemic-related crisis. So, experts have already expressed their apprehension that default loan amounts may continue to increase.
At present, around 9.0 per cent of the totally disbursed bank loans have turned default. It is alarming for various reasons. First, it is weakening the country's banking system. Second, it will slow the pace of economic recovery. Third, many small and medium enterprises will not get the necessary credits from the banks. Fourth, depositors will also face risk. The government should immediately step up in order to curb the default loans. The Bangladesh Bank should withdraw the flexible repayment option.

Ali Hossain
Motijheel, Dhaka