One of the conditions of the International Monetary Fund (IMF) was to reduce default loans. But default loans have not decreased, on the contrary, they are increasing uncontrollably. There is no possibility of reducing default loans next year either. Rather, there is a risk of further increase. In such a situation, the IMF mission is coming to Bangladesh on December 4. This time the main question of the organization will be – how will the central bank prevent the rise in default loans. What strategy will it take in this regard? Why did default loans suddenly increase so much? At the same time, the question will also come about the credibility of the previous government’s information. All in all, the government will face big questions about default loans this time.
Sources said that Bangladesh Bank has also completed the necessary preparations in response to the possible questions of the IMF. This time, the picture of the looting of the banking sector during the previous government’s tenure will be presented before the IMF. At the same time, the picture of the laundered money will also be presented. These loans are being identified as default because they are not in a condition to be recovered. That is why default loans are increasing. More installments of the looted loans will expire in the coming days. Then those loans will also be defaulted. Due to these reasons, defaulted loans will increase next year as well. At the same time, the picture of concealing the real information and data of various instruments including defaulted loans in the banking sector during the previous government’s tenure will also be highlighted. The fourth installment of the IMF loan is scheduled to be released in December. The mission will review the progress of the conditions given before the release of the third installment of the loan, which are supposed to be implemented before the release of the fourth installment. For this purpose, an IMF mission is coming to Dhaka on December 4. At the same time, the mission will examine the feasibility of providing the additional money requested by the government.
One of the IMF’s conditions was that the definition of defaulted loans should be made to international standards by next March. On Wednesday, the central bank issued a circular to define defaulted loans to international standards. This new definition will be effective from April next year. It has been provided that all types of loans or loan installments will be considered defaulted three months after the due date of payment. Currently, term and agricultural loans default after six months. The default period for these loans has been reduced to three months. This will further increase the amount of defaulted loans.
One of the conditions of the IMF’s $4.7 billion loan is that banks must reduce their defaulted loans. There is a condition that the defaulted loans of government banks must be reduced to 10 percent. In December last year, the defaulted loans in this sector were 20.99 percent. By last September, the defaulted loans in this sector had increased to 40.35 percent. In government specialized banks, the defaulted loans were 13.87 percent in December last year. In September, it decreased slightly to 13.21 percent. In private banks, there is a condition that the defaulted loans should be reduced to within 5 percent. In December last year, the defaulted loans in this sector were 5.93 percent. In September, it increased to 11.88 percent.
A large part of the frauds that have occurred in the country’s banking sector in the past 15 years have been smuggled abroad. Those loans were eligible for default but were not marked as default by corrupt officials of commercial banks. They have been illegally showing them regularly. Through this, the real picture of defaulted loans in the banking sector has been hidden. That is why after the change of government, the picture of defaulted loans for two quarters has been published during the new government’s tenure. It can be seen that defaulted loans increased by 1 lakh 3 thousand crore taka in the June quarter and September quarter. As a result, defaulted loans have now increased to 2 lakh 85 thousand crore taka.
Information on all frauds in bank accounts has not been published yet. The boards of nine banks taken over by the S Alam Group have been abolished and new boards have been reconstituted. Those banks are now being audited. It will take more time to find out all the information about the fraud. If that information is released, there is a risk that defaulted loans will increase further.
In addition, the IMF’s condition was to increase the recovery of defaulted loans and to form an asset management company to seize the assets of defaulters and recover the loans from them. The government has taken initiatives in this regard. A policy is being formulated. However, there is no person or institution in the country with experience in seizing mortgage assets from defaulters and managing them. Although there are several private sector agencies for recovering defaulted loans, their activities have not yet reached a satisfactory and acceptable level. Due to this, the process of forming an asset management company is being delayed. Bankers have recommended using the experience of India and Singapore in forming such companies. Thailand, China, and Nepal, among those countries, have been quite successful.
