Default loans rises nearly 17%

Default loans in the banking sector increased 16.8 per cent year-on-year to Tk 120,656 crore last year as habitual defaulters showed reluctance to repay the funds.

The ratio of the default loans accounted for 8.16 per cent of the outstanding loans given out by banks as of December last year compared to 7.93 per cent a year ago, according to data from the Bangladesh Bank.

A central bank official said some banks faced scams last year, fueling non-performing loans (NPLs) in the banking sector as a whole.

NPLs, however, decreased 10.2 per cent in the final quarter of last year compared to the previous quarter (July-September) when default loans stood at Tk 134,396 crore.

The BB official said banks usually try to recover their default loans in the final quarter of every year to increase their profit.

In addition, some banks traditionally reschedule their default loans ignoring the rules and regulations to paint a rosy picture of their financial health.

For this reason, default loans decrease to some extent at the end of a year, which was reflected in the NPL scenario of last year as well.