Monday, 30 December, 2024
Default loans in Bangladesh’s banking sector reached Tk2.85 lakh crore by the end of October, marking the highest in the country’s history.
The share of default loans also hit a 16-year high of nearly 17%.
The rise is attributed to regulatory violations during the Awami League’s 15-year rule that allowed politically connected individuals to take large loans.
Total disbursed loans stood at Tk16.82 lakh crore at the end of September, growing by 35% in three months.
Banking experts say the fall of the Awami League government in August has prompted banks to disclose real figures in their balance sheets. Stricter scrutiny and the withdrawal of concessional policies are expected to reveal more classified loans in the coming months.
The government and banks are under pressure to meet IMF conditions and reform loan policies, which could make many regular loans irregular.
S Alam Group reportedly took Tk95,000 crore in loans with alleged political influence, much of which is now being classified. In 2008, default loans stood at Tk22,480 crore, rising by 1,168% during the Awami League’s tenure.
This is the first time the information of defaulted loans became available since the fall of the government on 5 August, revealing the actual amount of the bad loans.
The money that was taken out from banks during the regime of Sheikh Hasina-led government of Bangladesh Awami League (AL) until it was ousted in the face of a student-people uprising, is now being identified as defaulted loans.
The banking system currently has a total of Tk1,682,800 crore in outstanding loans, according to Bangladesh Bank statistics released on Sunday. However, it is facing a provision shortfall of Tk55,378 crore as of September.
This is also the first data on defaulted loans since the fall of the Bangladesh Awami League-led government on August 5.
Meanwhile, the International Monetary Fund (IMF) has asked the Bangladesh Bank (BB) to take measures to prevent "second-round effects" of inflation. Thomas Helbling, deputy director for the Asia Pacific Department of the IMF, made the remarks at a press conference in Tokyo on November 1.
Responding to a query from Bangladeshi journalists, Helbling said, "Even though much of the recent increase in inflation was supply-related, given earlier increases in inflation, we think it's important for the central bank to prevent second-round effects."
The second-round effects of inflation occur when initial price increases lead people to expect ongoing inflation, causing workers to demand higher wages and businesses to raise prices further.
After the World Bank, the International Monetary Fund has now brought down Bangladesh's growth forecast for this year as political uncertainty, industrial unrest and floods weigh heavily on economic activities.
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Default loans in Bangladesh’s banking sector reached Tk2.85 lakh crore by the end of October, marking the highest in the country’s history.
The share of default loans also hit a 16-year high of nearly 17%.
The rise is attributed to regulatory violations during the Awami League’s 15-year rule that allowed politically connected individuals to take large loans.
Total disbursed loans stood at Tk16.82 lakh crore at the end of September, growing by 35% in three months.
Banking experts say the fall of the Awami League government in August has prompted banks to disclose real figures in their balance sheets. Stricter scrutiny and the withdrawal of concessional policies are expected to reveal more classified loans in the coming months.
The government and banks are under pressure to meet IMF conditions and reform loan policies, which could make many regular loans irregular.
S Alam Group reportedly took Tk95,000 crore in loans with alleged political influence, much of which is now being classified. In 2008, default loans stood at Tk22,480 crore, rising by 1,168% during the Awami League’s tenure.
This is the first time the information of defaulted loans became available since the fall of the government on 5 August, revealing the actual amount of the bad loans.
The money that was taken out from banks during the regime of Sheikh Hasina-led government of Bangladesh Awami League (AL) until it was ousted in the face of a student-people uprising, is now being identified as defaulted loans.
The banking system currently has a total of Tk1,682,800 crore in outstanding loans, according to Bangladesh Bank statistics released on Sunday. However, it is facing a provision shortfall of Tk55,378 crore as of September.
This is also the first data on defaulted loans since the fall of the Bangladesh Awami League-led government on August 5.
Meanwhile, the International Monetary Fund (IMF) has asked the Bangladesh Bank (BB) to take measures to prevent "second-round effects" of inflation. Thomas Helbling, deputy director for the Asia Pacific Department of the IMF, made the remarks at a press conference in Tokyo on November 1.
Responding to a query from Bangladeshi journalists, Helbling said, "Even though much of the recent increase in inflation was supply-related, given earlier increases in inflation, we think it's important for the central bank to prevent second-round effects."
The second-round effects of inflation occur when initial price increases lead people to expect ongoing inflation, causing workers to demand higher wages and businesses to raise prices further.
After the World Bank, the International Monetary Fund has now brought down Bangladesh's growth forecast for this year as political uncertainty, industrial unrest and floods weigh heavily on economic activities.
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