Bank loans issued during the previous Awami League administration are currently experiencing a significant default rate. Numerous entrepreneurs associated with the ousted party are failing to repay their loans due to various irregularities. Additionally, the rise in defaulted loans is being exacerbated by the ongoing economic recession in the country and the introduction of new policies. This trend is evident across nearly all banks, regardless of their standing.
This information has been validated by a recent report from Bangladesh Bank.
As per data from Bangladesh Bank, by the conclusion of June 2024, the total volume of defaulted loans within the country’s banking sector reached Tk 5,30,428 crore, which accounts for 27.09 percent of all loans disbursed. In contrast, at the end of March, the amount of defaulted loans was Tk 4,20,334 crore, reflecting a rate of 24.13 percent.Officials from Bangladesh Bank indicated that loans that were distributed without proper oversight during the tenure of the Awami League government are now facing defaults. The implementation of stricter loan classification rules in line with international standards has rendered many loans non-renewable, leading to an increase in defaults. Consequently, the actual situation regarding defaulted loans is becoming clearer.
When the Awami League government took office in 2009, the amount of defaulted loans in the country was merely Tk 22,481 crore. Since that time, this figure has been on a continuous rise. Economists suggest that a powerful group favored by the previous government has withdrawn substantial sums from banks through various irregular practices, a significant portion of which has been laundered overseas.
The extent of loan irregularities in five Islamic banks, which are under the control of the controversial S Alam Group from Chittagong, closely associated with the former government, is now coming to light. The defaulted loans in Islami Bank, First Security Islami Bank, Union Bank, Social Islami Bank, Global Islami Bank, and Exim Bank have surged significantly. The average default rate across these banks has surpassed 70 percent. As a result, Bangladesh Bank has opted to merge these five banks.
In addition, the defaulted loans of most banks, including public sector Agrani and Janata and private sector IFIC, UCB, NRB and NRB Commercial, are also increasing.
Meanwhile, 1,200 defaulting business entities have applied to the central bank for loan renewal under special consideration. Of these, more than 100 have already received the facility. The banks are planning to provide special policy support considering the situation.
