In what clearly looks like a case of pandemic blues, cases of default on bank loans have been pushed up by 8 per cent in December 2021. This amounts to 1.3 trillion Bangladeshi Takas.
The COVID-19 pandemic is having an impact on business in Bangladesh. This is evident from the upward trend in the incidence of defaulting on bank loans. Loan defaults have been to the tune of 8 per cent or 1.3 trillion Bangladeshi Takas, in December 2021.
The country’s central bank, Bangladesh Bank, provided a number of facilities like a loan moratorium and also helped further negotiations on installment payments. But none of that worked. The lending institutions have failed to curb the trend of defaulting loans.
The defaulting loans, amounting to 1.3 trillion Bangladeshi Takas constitute 8 per cent of all bad loans. It was 88,734 Bangladeshi Takas (7.66 per cent) during the same period last year.
The total debt of the banking sector stood at Tk 13.18 trillion, according to data made available from the central bank.
The debt balance was Tk 12.45 trillion end-September. Of this, the defaulted loans shot to Tk 1.15 trillion, or about 8.12 per cent of the total debt.
Past experience suggests that the default rate among the disbursed loans is a little more than 5 per cent – so, but that watermark, the defaults of 8 per cent have been very high in the data made available for December.
Earlier, on 20 February, Fazle Kabir, the governor of Bangladesh Bank had said that the economy faced a challenge following the COVID-19 pandemic, “but with the power of the resilient private sector of Bangladesh, the economy is performing relatively well in recent past.”
“Our GDP and total size of the economy have increased which is a good sign and reflects that we are on board,” he had said.
The release of the December data has belied the Bank governor’s optimism.
Kabir had claimed that the situation was in control because the government declared a stimulus package at the right time and ensured that there would be no liquidity shortages in banks.
Image: Wikimedia, Bangladesh Bank, By A Saber91