NPLs mark 9pc rise in Q1 Political unrest blamed

The volume of non-performing loans (NPLs) in the country's banking system increased further in the first quarter (Q1) of the current calendar year mainly due to political unrest.
The amount of NPLs rose by nearly 9.0 per cent to Tk 546.58 billion during the January-March period of this year from Tk 501.56 billion in the preceding quarter. It was Tk 572.91 billion in the Q3 of 2014.
However, the share of classified loans in the total outstanding loans of the country's banking system crossed double-digit mark again in the Q1 of 2015 despite close monitoring by the central bank.  
The share of NPLs rose to 10. 47 per cent during the period under review from 9.69 per cent three months back. It was 11.60 per cent in the Q3 of the last calendar year.
The classified loans cover substandard, doubtful and bad/loss of total outstanding credits which stood at Tk 5222.66 billion as on March 31 last, according to the central bank statistics.
"We're trying to bring down the share of NPLs in the total outstanding loans of the banking system below 10 per cent from the existing level as a short-term strategy," SK Sur Chowdhury, deputy governor of the Bangladesh Bank (BB), told the FE Thursday.
He also said the central bank has planned to bring down the share of NPLs to below 5.0 per in future.
"We've already asked the banks for strengthening monitoring and supervision so that fresh loans will not turn into classified ones," the deputy governor noted.
Earlier on April 30 last, the BB asked the commercial banks at a bankers' meeting to make sure that the rescheduled loans would not turn classified again and also to take necessary measures to check the tendency of classified loans.
"The amount of classified loans increased in the Q1 of 2015 as different sectors including transport and real estate were affected badly due to political unrest during almost the entire quarter," Nurul Amin, Chief Executive Officer and (CEO) and Managing Director (MD) of the Meghna Bank Limited, explained.
Mr Amin, also former chairman of the Association of Bankers, Bangladesh (ABB), expected that the volume of NPLs would decrease in the second quarter (Q2) of this year.
During the January-March 2015 period, the total amount of NPLs with five state-owned commercial banks (SoCBs) came down to Tk 226.54 billion from Tk 227.63 billion in the previous quarter.
The central bank included the name of BASIC Bank Limited as SoCB instead of a specialised one or development finance institution (DFI) in its classified loan statement in the Q4 of 2014.
On the other hand, the total amount of classified loans with 39 private commercial banks (PCBs) rose to Tk 227.47 billion in Q1 from Tk 184.26 billion in the previous quarter.
The NPLs of nine foreign commercial banks (FCBs) also rose to Tk 15.81 billion from Tk 15.29 billion.
The classified loans with three development-finance institutions (DFIs) surged to Tk 74.17 billion in the Q1 from Tk 72.60 billion in the Q4 of 2014, the BB data showed.
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