During the one and a half decade of Awami League, non-performing loans in banks have increased significantly, which has emerged as a serious problem for the banking sector

During the one and a half decade of Awami League, non-performing loans in banks have increased significantly, which has emerged as a serious problem for the banking sector. During the formation of the Awami League government in 2009, the amount of defaulted loans in the banking sector was Tk 22 thousand 481 crore, which increased to Tk 211 thousand 391 crore at the end of June 2023. Various influential groups and government policies are believed to be responsible for this increase. Large loan disbursements from banks to influential people, easy rescheduling of loans, and special facilities for loan waivers have played a role in increasing the amount of defaulted loans. In particular, S Alam Group and other influential groups have taken huge loans but failed to repay them, which is a threat to the stability of the banking sector. Bangladesh Bank and stakeholders feel that the actual amount of defaulted loans is much higher, which needs to be addressed through policy changes and drastic measures. Experts emphasized that effective steps should be taken to recover the debt by taking legal action against the defaulters and freezing their assets. You said: In one and a half decade of Awami League, defaulted bank loans have increased by Tk 1 lakh 89 thousand crore. In one and a half decade of Awami League, defaulted bank loans have increased by Tk 1 lakh 89 thousand crore. On the one hand, this former government has given various facilities to give large loans to influential people from banks, on the other hand, one policy after another has been taken to show less defaulted loans on paper. Despite this, the increase in defaulted loan documents in 15-and-a-half years paints a dire picture of the financial sector. During this time, only in the banking sector, defaulted loans increased by Tk 1 lakh 88 thousand 910 crores. Most of these loans are non-performing. According to the data of Bangladesh Bank, at the end of last June, defaulted loans increased to 2 lakh 11 thousand 391 crores. As a result, 12.56 percent of the loans disbursed from the country's banks have now defaulted. When Awami League formed the government in 2009, the total defaulted debt was Tk 22,481 crore. As a result, when the party was in power for three consecutive terms and seven months, the amount of defaulted loans increased, with which 6 Padma Bridges or more than 5 Metrorails could have been built. Banking sector stakeholders, however, feel that the actual amount of defaulted loans is much higher. Because the central bank defaulted loans and loans suspended by court orders were not taken into consideration. Bangladesh Bank has started taking steps to reform the banking sector after the fall of the Awami government on August 5. Meanwhile, the board of directors of nine banks, most of which were controlled by the S Alam Group, has been restructured. The regulatory body has also given various instructions to the banks to overcome the situation. As a result, the senior officers of the central bank believe that the real picture of defaulted loans will come out in the coming days. Moinul Islam, former president of Bangladesh Economic Association and former professor of economics department of Chittagong University, told Prothom Alo about the steps to be taken to recover defaulted loans. The actual defaulted loans are now more than Tk 5 lakh crore. The loan suspended by the court and the loan foreclosed did not come to Bangladesh Bank. Action should be taken against the top 10 defaulters of all banks by constituting a tribunal. They have to seize their property and collect the money. Otherwise, the money will not be collected, the defaulters will escape through legal loopholes. Mainul Islam also said, 'S Alam Group took a loan of Tk 2 lakh crore from the bank sector, a large part of which has been smuggled. These loans are not included in the list of defaulters. Special initiatives should be taken now to collect money by acquiring and selling their assets and industries. Maybe half of the money can be collected in this.' How much has the defaulted loan increased in 2009 when Awami League came to power, then the defaulted loan in the bank sector was Tk 22 thousand 481 crores. At the end of last June, bank default loans increased to 2 lakh 11 thousand 391 crores, which is 12.56 percent of the total loans. Out of this, defaulted loans of six state-owned banks are Tk 1 lakh 2 thousand 483 crores. About 33 percent of the loans of these banks are in default. Among state-owned banks, Janata Bank tops the list, with defaulted loans of around Tk 48,000 crore. The NPLs of these banks have increased mainly due to the big three business groups. Out of which Beximco Group's 18 thousand crore rupees,About Tk 8000 crore of Anontex Group and Tk 2000 crore of S Alam Group have defaulted. Vice Chairman of Beximco Group is former Prime Minister Sheikh Hasina's advisor Salman F Rahman and Chairman of S Alam Group is Saiful Alam. Janata Bank Managing Director Abdul Jabbar told Prothom Alo, 'We are not hiding anything. As a result, the bank's defaulted loans have increased so much. I am also communicating with the defaulting institutions. They are trying to reschedule the loan by depositing money.' According to the documents of Bangladesh Bank, the defaulted loans of private banks are Tk 99 thousand 921 crores, which is about 8 percent of the total loans. National Bank, AB Bank and Islami Bank topped the list. Apart from this, defaulted loans of foreign banks are Tk 3,229 crore and specialized banks are Tk 5,756 crore. Last December, defaulted loans in the banking sector were Tk 1 lakh 45 thousand 633 crores. According to Bangladesh Bank, defaulted loans increased by Tk 65 thousand 754 crore in six months. Out of this, 36 thousand 662 crores increased during January-March. In addition to the state-owned banks, the defaulted loans are increasing rapidly in private banks as well. Central bank supervision, appointment of former and current bureaucrats as directors on the board, and central bank-appointed observers are also failing to curb the defaulting loans of many private banks. International Monetary Fund (IMF) has given a loan of 4.7 billion dollars to Bangladesh, one of the conditions of which is to bring down the non-performing loans in the banking sector to 10 percent by 2024. But quite the opposite happened. That is, defaulted loans have increased. Economists and analysts have long expressed concern about the trend of increasing defaulted loans, but the former Finance Minister Abul Hasan Mahmud Ali did not say anything about it in the budget he gave last June. In the last 15 years, defaulters and influential businessmen have been exempted one after the other by the state. On one hand, the law has been relaxed to give more loans to special customers, on the other hand, the law has been changed to give loans to defaulters. After coming to power in 2009, the then government relaxed the definition of defaulted loans. A loan restructuring facility was granted in 2015 following Salman F Rahman's application. Special concessions are also given in case of loan waiver. In 2019 special facility is given to regularize the loan with 2 percent money. Then, when the covid pandemic started, the central bank offered loan default facility to all types of customers. As a result, even some good borrowers become reluctant to repay the loan. Former governor Abdur Rauf Talukder joined the central bank and issued new policies giving relief to defaulters. An opportunity is given to regularize defaulted loans by depositing 2.5 to 6.5%. 10 to 30 percent of the money had to be deposited earlier to regularize defaulted loans. Apart from this, defaulted loans are allowed to be repaid in five to eight years. Earlier, a maximum time of two years was given to repay these loans. In the new policy, the central bank also leaves the power of granting facilities against defaulted loans and rescheduling them to the board of directors of the respective banks. As a result, the bankers themselves decided which loans would get the benefit of rescheduling. Earlier, approval of central bank was required in case of loan rescheduling. As a result, the opportunity to hide defaulted loans has increased. However, the picture of increase in defaulted loans is consistent.Bank sector-related people think that it is terrible and scary. Private Mutual Trust Bank Managing Director Syed Mahbubur Rahman told Prothom Alo that now the true picture of the defaulting customers should be found out by conducting an independent audit. How deep is the problem of defaulted loans? The actual value of collateral against these loans should be ascertained. After taking the necessary steps, the debt can be recovered. Only pouring facilities will not recover defaulted loans. ChatGPT said: ChatGPT During the one and a half decade of Awami League, non-performing loans in banks have increased significantly, which has emerged as a serious problem for the banking sector. During the formation of the Awami League government in 2009, the amount of defaulted loans in the banking sector was Tk 22 thousand 481 crore, which increased to Tk 211 thousand 391 crore at the end of June 2023. Various influential groups and government policies are believed to be responsible for this increase. Large loan disbursements from banks to influential people, easy rescheduling of loans, and special facilities for loan waivers have played a role in increasing the amount of defaulted loans. In particular, S Alam Group and other influential groups have taken huge loans but failed to repay them, which is a threat to the stability of the banking sector. Bangladesh Bank and stakeholders feel that the actual amount of defaulted loans is much higher, which needs to be addressed through policy changes and drastic measures. Experts emphasized that effective steps should be taken to recover the debt by taking legal action against the defaulters and freezing their assets. What could be the solution? bang 1. Strict law making and enforcement Strict laws against defaulted loans: Rs Constitution of Independent Economic Tribunal:Defaulted loans 2. Reforms in bank management To ensure transparency and accountability of the Bank's Board of Directors:Bank management Increase in Central Bank Powers:Bangladesh Tightening of loan rescheduling rules Strict policy of loan rescheduling: Loan P 4. Increasing technology and transparency Automatic Credit Monitoring System:bang Digital Database: Khelapi R 5. Following international standards Adherence to IMF conditions: Ia Recruitment of International Consultants:bang 6. Increase public awareness Awareness on defaulted loans:in public Implementation of these measures will reduce the problem of defaulted loans and restore stability in the banking sector How is recovery possible? Debt recovery is a challenging task, but take the right steps 1. Seizure and sale of property Seizure of property: Rs Sale of Property:seizure a 2. Policy formulation of structural rescheduling Tightening of Rescheduling Conditions: Defaulted Loans Re Deadline: Again 3. Speedy settlement through court Special Economic Tribunal: Khel DISPOSAL OF COURT STAY:j 4. Strengthening Corporate Governance Improving the efficiency of the Bank's Board of Directors: b Transparency in Bank Management:bang 5. Strict action against influential defaulters Social and business pressures on debtors: Debtors Acquisition of property of dominant group:dominant 6. International assistance and cooperation Recovery of Money Laundered Abroad:Loans that Foreign Agency Assistance: Int 7. Exercising through incentives and pressure Incentives:Those interested in repaying defaulted loans, Pressure: pressure on defaulters b If these measures are implemented effectively, recovery of defaulted loans from the banking sector and economic stability of the country b What is the central bank to do? The central bank, i.e. Bangladesh Bank, can play an important role in controlling and recovering bad debts. Take some effective steps for this 1. Increased monitoring and control Tightening supervision: b Risk Assessment and Management:bang 2. Reform of rules and regulations Revisiting the definition of defaulted loans:default Tightening of loan rescheduling rules: Rs 3. Internal and external audit Enhancing audit standards:default Independent Audit Firm: Audit 4. Changes in the top management and board of directors of the bank Administrative System:which Appointment of Observer: Banks 5. Digitization and data sharing Central Database: All Credit Scoring System: Modern Credit 6. Legal action against maximum defaulters List of top defaulters: Bangladesh Foreign Assets Recovery: Who 7. International cooperation International Consultants:international Following International Standards: As per international standards 8. Awareness raising and education Training of Bank Officers: Loans Public awareness: lack If the central bank implements these steps, it will be possible to reduce the amount of defaulted loans in the country's banking sector and maintain economic stability. How to restructure debt? oan Restructuring is a process where the borrower is given an opportunity to repay the loan by changing the repayment terms. This is usually done when the borrower is unable to repay the loan or is at risk of default. There are several steps that can be followed to restructure the loan 1. Analysis of borrower's financial condition Assessing financial situation: First Debt Situation Analysis: Debt 2. Formulation of restructuring policies Determination of Restructuring Terms:Renovation Debt Restructuring Models:Debt Restructuring 3. Negotiation and agreement Discussion with Borrower: Rs Contract preparation and approval: Alo 4. Rescheduling the loan Rescheduling of installments: No Interest rate changes: Re 5. Monitoring and reporting Regular monitoring:R Report Preparation:Debt re 6. Take appropriate action Failure to reschedule the loan: If the borrower Revaluation after Debt Restructuring:something 7. Legal and policy support Central Bank Support: Rs Legal Advice: Debt this What is the legal system? aking legal action is an important step in debt collection, especially if the borrower fails to repay the loan even after debt restructuring or rescheduling. Legal action can be taken through several steps in this process: 1. Sending Notice to Borrower Legal Notice: Q Demand letter:i 2. File a case against the borrower Debt Recovery Case: Nir Prohibition cases: Bank needs 3. Tribunal for Debt Recovery Debt Recovery Tribunal:Bangladesh Application of Debt Recovery Act: ২০০৩ সালের ঋণ পুনরুদ্ধার আইন (The Money Loan Court Act, 2003) এর আওতায় ঋণ পুনরুদ্ধার ট্রাইব্যুনাল থেকে আদেশ নিয়ে ঋণগ্রহীতার সম্পত্তি নিলাম করা যেতে পারে। Seizure and sale of collateral Possession of collateral: R Sale by Auction:Adal 5. Declaration of bankruptcy Bankruptcy cases:If debt Monetization Process: Bankruptcy 6. International legal action Assets Abroad:If the borrower Asset Recovery: Other 7. Individual cases against responsible persons Suit against directors and corporate guarantors: Borrower j 8. Implementation of court orders Ruling in effect:Adal 9. Legal Reassessment and Appeal Appeal of Judgment:If the court Legal Review:need 10. Support of lawyers and consultants Lawyer's Advice: Bank 11. Central bank support Direction of Regulatory Authority: Central These processes of recovering defaulted loans by taking legal action are important for both the borrower and the bank. This will help in reducing non-performing loans and maintaining the stability of the banking sector. Bank reform strategy? Bank reforms are necessary to resolve the ongoing crisis in the banking sector of Bangladesh and to ensure long-term stability. Here are some important bank reform strategies 1. Development of institutional framework Appointment of qualified persons to the Board of Directors of the Bank:Bank Transparency in bank operations: Banks 2. Increase in provisioning and capital buffer Strict implementation of provisioning policy: Banks Increasing Capital Buffer:in the bank 3. Legal and regulatory reform Reforming the Legal Framework for Debt Recovery:R Development of control and supervision:central bank 4. Use of technology and cyber security Development of Digital Banking System:bang Strengthening Cyber ​​Security:bang 5. Strategic steps to control defaulted loans Initiatives to reduce defaulted loans: Khel Tightening loan approval criteria: New Rs 6. Increase accountability and transparency Improving the quality of auditing and regulatory reporting: Ex Performance Evaluation of Institutions:Banks 7. Improving the quality of customer service Customer Service Development: Banks Gr FinTech and Innovative Services: FinTech 8. Bank mergers and creation of bad banks Consolidation of Inefficient Banks: Finance Creation of the Evil Bank: Play 9. Refurbishment as per international standards and recommendations Following Basel III Guidelines: International Reforms as per IMF and World Bank recommendations: Inter this