As many as top 61 big borrowers collectively owe commercial banks a whooping Tk53,000 crore, and each of them borrow more than Tk500 crore from different lenders, as per a list the central bank prepared.
These borrowers account for 25% of total large loan of Tk2,15,000 crore, which also accounts for 34% of the total loans and advances of Tk6,34,000 crore as of September last year, according to the Bangladesh Bank data.
Of them, 21 are loan defaulters, making up 25% of entire default loan valued Tk20,000 crore, it revealed.
Bangladesh Bank estimated the loan amount borrowed by individual large borrowers with over Tk500 crore each, but it has not any actual statement about the exposure of groups, according to a central bank source.
Beximco Limited, the country’s industrial conglomerate Beximco Group’s flagship company, is the biggest borrowers and loan defaulters as well, borrowing around Tk3,300 crore from a consortium of 10 lenders, the data said.
S Alam Group came second taking loan of around Tk6,000 crore in the name of its seven companies having loan exposure of over Tk500 crore each.
The global recession that affected many of large borrowers, political instability and misuse of banking system with developing cozy relationship, leading to thousands of crores of bad loans or non-performing loans, officials say.
The steep rise in bad loans in the past few years has forced the central bank to come up recently with strong measures to ensure banks do not sweep bad loans under the carpet giving facilities to restructure loan both for the defaulters and non-defaulters.
On January 27, the central bank had approved a restructuring bad loan policy under which a big borrower would get a maximum of 12 years to repay loans above Tk500 crore.
“We have seen that globally reputed banks across the world had to close shops due to bad debts because of a few individuals. But now with increasing bad loans by some willful defaulters, the threat looms large over banking sector. It needs to be addressed before it is too late,” said a banker.
He said those who were willful defaulters and took illegal means should be brought to book.
NCC Bank Managing Director Hafiz Ahmed said big loan restructuring for long term is a mismatch between assets and liabilities, as maximum deposits are of short term.
“Repayment failure of large loan is a serious threat for the banking sector, reducing banks’ capability to provide fresh loan for long term in future,” he said.
The veteran banker criticised the big loan restructuring policy and said the central bank’s move will encourage loan defaulters and discourage the good borrowers.
Among some of the policies, a big borrower can have the facility only once but has to apply for it by June 30 this year and if a borrower fails to repay two instalments consecutively, he will forfeit the facility, and his fate will be decided as per the bankruptcy law.
Though interest rate on the restructured loan would be fixed by the bank, it has to be more than the aggregate amount of the bank’s cost of funds and 1% interest rate, according to policy.
The other large borrowers having exposure over Tk500 crore to multiple banks and non-bank financial institutions are – BRAC, Nitol Motors, Grameen Phone, S Alam Edible Oil, Shah Cement Industries, Ananda Shipyard, C.P Bangladesh, Abul Khair Steel, KSRM Steel, S Alam Vegetable Oil, Abdul Monem Sugar Refinery, Pacific Bangladesh Telecom, Abdul Monem, Grameen Shakti, Anwer Khan Modern Hospital, Marrine Vegetable Oils, Mohammed Elias Brothers, IFAD Autos, Zaber and Zubair Fabrics, S Alam Refined Sugar Industries, Rupayan Housing, Best Holdings, Powerpac Mutiara Keraniganj Power Plant, S A Oil Refinery, Western Marine Shipyard, Bashundhara Paper Mills, Rising Steel, Bangladesh Agricultural Development Corporation, Jamuna Builders, BSRM Steel, The ACME Laboratories, Airtel Bangladesh, Samannaz Super Oil, Mother Textile, BURO Bangladesh, BARAKA Patenga Power, Nurjahan Super Oil, KYCR Coil Industries, PFI Securities, Navana Real Estate, Bashundhara Industrial Complex, Abul Khair Tobacco, Abul Khair Limited, Kabir Steel Re-Rolling Mills, Yasmin Spinning Mills, GPH Ispat, Zubair Spinning Mills, Siddique Traders, S Alam Trading Company, S Alam Cold Rolled Steels, Zaber Spinning, NBL Securities, Max Spining Mills, S Alam and Company, Noman Composite Textile, Deshbandhu Sugar Mills, Banglalink Digital Communication, Dhaka Trading House, Project Builders.
A central bank official said to recover the bad loans through restructuring is important as many countries like India have adopted such policy.
To defend the loan restructuring policy for defaulters, BB Governor Atiur Rahman earlier said it was formulated for the sake of country’s economy and employment. “The defaulters, though, get preference from the central bank repeatedly on excuse of the political unrest but so far good borrowers, who maintain their loan repayment regular even after facing the same difficulties, did not get any favour.”
In its latest monetary policy statement, the BB said the central bank firmly discouraged the abetting of habitual and willful loan repayment defaulter.
It also created room for helping out recovery of genuine businesses distressed by circumstances beyond their control with realistic debt restructuring in line with international best practices, the monetary policy said.