Problem loans are on wane

The amount and percentage of default loans witnessed a decline in the recent times.The aggregate amount of default loans in the last quarter of the calendar year, 2010, until December 31 stood at Tk 227.09 billion (22,709 crore), which was Tk 13.79 billion (1,379 crore) less than the previous quarter (till September 30, 2010). In the quarter ending on September 30 last, the total amount of default loan was Tk 240.88 billion (24,088 crore), according to the Bangladesh Bank statistics released Wednesday. The classified loans were 7.27 per cent of the total credit portfolio of the banks until December last compared to 8.47 per cent three months earlier, while the net default loans stood at 1.28 per cent, down from 1.64 per cent in September, 2010. According to quarterly cluster analysis until December 2010, the default loans of the state-owned, private, foreign and specialised banks stood at 15.66 per cent, 3.15 per cent, 2.99 per cent and 24.15 per cent respectively of their aggregate credit portfolio. The default loans of such banks in the previous quarter until September last year were 19.65 per cent, 3.82 per cent, 2.50 per cent and 23.83 per cent respectively. The amount of default loans declined in the last quarter of 2010, except in the case of foreign banks which, however, had the lowest rate of loan default at 2.99 per cent. The Bangladesh Bank statistics also showed that the overall Minimum Capital Adequacy Ratio (MCAR) of the banks was at a satisfactory level. But its review indicated that there is some "capital shortfall" in seven or eight banks, including four state-owned and specialised ones. The central bank has already directed them to take necessary steps to fulfill the target of achieving the minimum capital requirement. - UNB