Cumulative written-off bank loans now Tk 414.37b

Written-off loans continued to rise until March, 2016 as the banks cleaned their balance sheets by reducing default loans, officials said.
"The rising trend of written-off loans indicates lack of due diligence while sanctioning credits," a senior official of the Bangladesh Bank (BB) told the FE Monday.
"Writing off loans is a global practice. But it will depend on capability of the bank concerned to write off its bad loans. This is because 100 per cent provisioning is required before writing off any loan," the central banker explained.
Cumulative loans, written off by the banks, rose by nearly Tk 2.0 billion to Tk 414.37 billion during the first quarter of the current calendar year from Tk 412.37 billion three months ago, according to the central bank's latest statistics.
However, the amount of banks' cumulative written-off loans increased by more than 11 per cent to Tk 414.37 billion as of March 31 last from Tk 372.52 billion in the same period of the previous calendar year.
During the January-March 2016 period, the amount of written-off loans by six state-owned commercial banks (SoCBs) rose to Tk 220.78 billion from Tk 220.67 billion in the previous quarter.
On the other hand, a total of Tk 180.41 billion loans were written off by 39 private commercial banks (PCBs) during the period under review against Tk 179.10 billion three months ago.
Loans, written off by nine foreign commercial banks (FCBs), rose to Tk 7.64 billion in the Q1 of 2016 from Tk 7.06 billion in the previous quarter of 2015.
Two development finance institutions' (DFIs) written-off loans remained unchanged at Tk 5.55 billion in the Q1 of this year.
"We've already taken various measures including appointing private recovery agents to realise our written-off loans but the result was not satisfactory," a senior official of a leading private commercial bank (PCB) told the FE.
He also said the overall legal process will be reformed to expedite the recovery of such loans.
The central bank introduced guidelines for writing off classified loans in 2003 aiming to improve loan recovery and make the financial statements of banks more transparent and accountable.
Under the existing provisions, the bad loan portfolios remaining for a period longer than five years will come under the provision of writing off bad loans. Before making any final decision in this regard, the bank management has to ensure 100 per cent provisioning against the amount to be written off.
On the other hand, the volume of non-performing loans (NPLs) increased by more than 15 per cent to Tk 594.11 billion in the Q1 of 2016 from Tk 513.71 billion in the preceding quarter despite rising trend of written-off loans.
The share of NPLs also rose to 9.92 per cent during the period under review from 8.79 per cent three months back.
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