Bad loans in banking sector hits Tk6.75 lakh crore: White Paper

The amount of bad loans in the banking sector has been increasing rapidly in recent years, as reflected in data from Bangladesh Bank (BB), according to the recently released White Paper.

In June 2021, the central bank data showed the defaulted loan rate was 7.9%. By the end of June this year, it had exceeded 12%.

Around 88% of these defaulted loans are categorised as bad quality loans, according to the report.

The severity of the issue has been described as the 'black hole' of the banking sector, with a depth three times greater than what is visibly apparent.

The central bank’s statement at the end of last June revealed defaulted loans amounting to Tk211,391 crore.

This figure surged to over Tk288,000 crore by September.

Domestic economists and international organisations have consistently questioned the accuracy of the defaulted loan data presented by the central bank.

Following an independent assessment of banks’ assets by a committee comprising domestic and international chartered accountants, the defaulted loan ratio could rise to 25%, according to experts.

Bangladesh Bank Governor Dr Ahsan H Mansur told UNB that the current defaulted loans ratio of 12.50% may double after the assets evaluation.

“We have to accept the reality, which was hidden earlier. But there is no solution to the problems by hiding the information of banks’ bad loans,” he said.