Defaulted industrial loans soar by 39.67pc in July-March

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Defaulted loans in the industrial sector skyrocketed by 39.67 per cent in the first nine months of the current financial year 2014-15 compared with that in the same period of the FY14 due to a dull business climate amid political unrest and uncertainty.

According to the latest Bangladesh Bank data, the defaulted industrial loans stood at Tk 18,645.38 crore in July-March of the FY15 against Tk 13,349.47 crore in the same period of the FY14.

An economist and businesspeople said that the industrial sector faced a major setback in recent months due to political violence that fuelled the defaulted loans in the sector.

Former finance adviser to the interim government AB Mirza Azizul Islam told New Age on Monday that defaulted loans in the banking sector increased in the first nine months of the FY15 as a good number of businessmen failed to repay instalment of their loans in due time because of political unrest.

Besides, some businesspeople also did not repay their loans showing excuse of the political unrest that resulted in a large amount of defaulted loans in the banking sector, he said.

The BB data, however, showed that industrial loan disbursement by the banks and non-bank financial institutions increased significantly in July-March of the FY15.

Banks and NBFIs disbursed industrial loans amounting to Tk 1,59,243.38 crore in the first nine months of the FY15 against Tk 1,22,356.87 crore in the same period of the FY14.

Mirza Aziz said that there was no significant cause of the rise in the industrial loans in the period as the businesspeople faced a major setback in expanding their business due to the political unrest.

He said, ‘To get more loans, the businesspeople convinced banks that their previous loans would be defaulted due to the sluggish business if fresh loans were not disbursed in favour of them.’

AK Azad, a former president of the Federation of Bangladesh Chambers of Commerce and Industry, told New Age that the country’s domestic market counted huge losses due to the political violence during January-March of this year that played a role in increasing the non-performing loans.

‘Exporters frequently failed to make shipment of their products due to a non-stop blockade along with frequent hartals in the period. The situation forced the businessmen to be loan defaulters,’ he said.

Some industries like jute mills failed to supply their products to the market due to the blockade and some mill owners are now facing defaulted loans, said Azad, also chairman of Shahjalal Islami Bank.

Industrial loan disbursement by five state-owned commercial banks — Sonali, Janata, Agrani, Rupali and BASIC — increased by 29 per cent to Tk 3,523.03 crore in the first nine months of the FY15 from Tk 2,731.01 crore in the corresponding period of the FY14.

The defaulted loans in the SCBs increased by 10.58 per cent to Tk 4,981.28 crore in the nine months compared with that of Tk 4,504.57 crore in July-March of the FY14.

Loan disbursement by three state-run specialised banks — Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Bangladesh Development Bank — dropped by 30.07 per cent to Tk 2,296.81 crore from Tk 3,284.49 crore in the corresponding period of the FY14.

The defaulted loans in the specialised banks increased by 138.30 per cent as their non-performing loans stood at Tk 4,256.06 crore in the period against Tk 1,785.98 crore in July-March of the FY14.

Industrial loan disbursement by the private commercial banks increased by 26.62 per cent to Tk 1,23,200.53 crore in July-March against Tk 97,298.63 crore in the same period of the FY14.

The defaulted loans in the PCBs increased to Tk 7,438.54 crore in July-March from Tk 5,738.53 crore in the same period of the FY14.

The foreign commercial banks disbursed industrial loans amounting to Tk 22,005.76 crore in the first nine months against Tk 13,577.40 crore in the first nine months of the FY14 while their defaulted loans increased to Tk 515.52 crore from Tk 373.23 crore.