Default loans cripple banks

News Report Defaulted loans or non-performing loans in the banking sector rose alarmingly. Despite that Bangladesh Bank allowed restructuring of a huge amount of large loans of different corporate groups, sources said. The country's state-owned banks' default loans have shot up alarmingly and large amounts of loans have been written off. The banks’ financial situation has deteriorated particularly over the past seven years. The state-owned Sonali Bank faced a massive financial scandal during this period. Some businessmen in many cases have chosen Sonali, Janata, Agrani, Rupali and BASIC Bank for fund misappropriation. Over the past six years, among the state-owned four banks, default loans of Janata Bank have gone up by 85 per cent, Sonali Bank by 65 per cent, Agrani Bank by 40 per cent and Rupali Bank by 17 per cent. The total amount of default loans of these four banks combined is about 20 thousand crore taka. Outside of this, loans of about 15 thousand crore taka of these four banks have been written off. And over the past six years, about 12 thousand crore taka has been misappropriated from these four banks and BASIC Bank, according to the sources. With government-appointed boards on one hand, and politically influenced loans on the other, these five state-owned banks have become the worst banks in the country. Unscrupulous businessmen use these banks to siphon off their funds. In recent times the four banks were provided with huge capital in cash. This was provided through budget allocation. In other words, after destroying the deposits of the public, the banks were given public money. The successive governments had been providing these banks with capital since 1991 but it looked as if there is no end to this. The problem of the banks was in governance structure, say experts. A number of banks including state-run Janata restructured around Tk 15,000 crore in loans of several corporate groups, on easy terms. Besides, the BB allowed the banks to reschedule defaulted loans avoiding rules and regulations to show that the non-performing loans have decreased. The non-performing loans in the private commercial banks rose to Tk 21,760 crore. The defaulted loans in the nine foreign commercial banks have also increased