Banglar Bir
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Sixty per cent of defaulted loans taken from public banks written off
A M K Chowdhury
Writing off loans means those loans which could not be recovered from the defaulters. The Central Bank introduced the loan write – off provision in 2003. A Bangla daily reported that default loans accumulated in four state – owned banks amounting to Tk.10,000 (ten thousand) crore were written – off by banks in last four years. They are: Sonali, Rupali, Janata and Agrani Bank. Sonali Bank accounted for Tk. 5,200 (five thousand two hundred) crore, Janata Bank for Tk. 2,100 (two thousand one hundred ) crore, Rupali Bank for Tk. 1,019 (one thousand nineteen) crore while Agrani Bank5,354 (five thousand three hundred fifty four) crore were written – off in 2013-16 period. (The Daily Naya Diganta, dated July 12, 2017)
Loan write–off is a ‘loss’ for the banks. For example, a bank has earned Tk. 500 crore as profit in a year. If the bank management wants to write off Tk. 100 crore default loan, the bank will have to show Tk.400 as profit after adjustment of Tk. 100 crore from the profit. The bank management has to transfer the record of such default loans to a separate register from the balance sheet, as written off loans. A bank has to adjust the write – off loans from the annual profit earned by the bank. All these loans were granted on political consideration over the years. At that time it could not be taken into consideration whether they would be able to refund loans. Moreover ‘ political consideration creates financial anomalies in approving loans. (The Holiday, dated June 22, 2012)
List of top 100 loan defaulters placed by Finance Minister
An English language daily reported that Finance Minister (FM) AMA Muhith placed a list of the country’s top 100 loan defaulters in Jatiya Sangsad (JS) and said the classified loan now stands at Tk. 1,113 b (Tk. 111,347 crore) as of April 2017 as per the data of the Credit Information Bureau (CIB) of Bangladesh Bank (BB) Of the loan defaulters two are individuals and the rest companies. The two individuals are MujiburRahman Khan and EmdadulHoqueBhuiyan. Two companies including Bismillah Towels and Jamuna Agro Chemical are in the list twice. (The Daily Observer, dated July 11, 2017)’
The same English language daily reported on the same day that state- owned Agrani Bank Has incurred a loss amounting to Tk.7 (seven) billionin the last calendar year due to rise in its non-performing loans. The amount is a huge jump from the year 2015 when its net loss was Tk.650 million. Due to financial anomalies in approving loans to different parties without assessing real scenario, the bank later could not recover its loans. As a result, its classified loans continued to rise and there was a large amount of provision against non-performing loans. The bank recorded Tk.31.17 billion in new default loans in the last year and Tk. 9.53 billion was realized at the same time.
Earlier the FM said the number of loan-defaulting individuals and companies in Bangladesh now stands at 202,623. He ,however, did not disclose how much money they owe to the banks. Default stood at Tk.734.09 billion until March accounting for 10.53 percent of the total loans disbursed, according to data from Bangladesh Bank. The FM said state bank retrieved Tk. 301.2 billion in defaults in the first three quarters of fiscal 2017. The FM further said almost 19 percent of branches of the state banks were running into losses.
Citing data updated to March 31, the FM said that of the 5,134 branches of the commercial and specialized banks run by the government, 952 ere not making any profit. (The Daily Observer, dated June 21,2017)
Another news report said Bangladesh Bank (BB) will maintain its cautionary stance in the monetary policy statement (MPS) which will be announced at the end of this month . The MPS would be finalized on the basis of the national budget for the 2017-18 financial year and the fiscal policy directions. According to the national budget the government has set the target at Tk. 28,203 crore for borrowing from the banking system. (The Daily Observer, dated July 16, 2017)
The Directors of private banks are also making a huge amount of loan available to themselves from the respective banks depriving other legitimate borrowers. As of December last, directors of 40 private banks in the country availed of Tk. 16,000 crore as loan against their (banks) total capital of Tk.582,718crore. Out of Tk. 494,919 crore the private and public banks disbursed as loan in December 2016, their directors took Tk. 100,000 crore. Of this Tk.70,000 crore went to the private bank directors.
Recovery of loan by these banks has been poor, leaving a lingering affect on the capital and luring more directors and their favored employees to take loan. The money disbursed to the directors is six times higher than borrowing by other clients. (The Daily Observer, dated May 17, 2017).
A newspaper report said client complaints are increasing day by day in Bangladesh Bank (BB), the central bank that has already received at least 4,530 complaints of irregularities and frauds of public srctor and private banks and financial institutions in 2015 – 16 fiscal year. State –owned Sonali Bank topped the list with 256 complaints against their branches. Privately operated BRAC bank was second with 175 complaints. (the Daily Observer, dated March 7, 2017).
These are the scenario of banking sector of Bangladesh. Political consideration should not be accepted for granting loans. The country’s monetary should be improved. Earlier the FM said banking system has witnessed a ‘sea – level’ looting over the years, (The Holiday, dated August 12,2016). Unless the practice of ‘sea – level’ looting is stopped, needless to say, the country’s economic development will be hampered to a great extent, the government should realize it.
The High Court questioned on 1 March this year the Bangladesh Bank’s power to write off loans and asked for a list of the business entities and individuals whose loans were waived until Dec 31 last year and the amounts, the bdnews24.com reported. The Bangladesh Bank governor will have to submit the list within 30 days. The governor was also asked to inform the court whether any of the companies or individuals were also enjoying any other loan facilities and, if so, the amount of such loans.
The High Court asked why the provision relating to “waiver of loan or part of loan” contained in Section 28 (1) of the Bank Companies Act, 1991 and the power given to the Bangladesh Bank to “waive loans”, as contained in Sub-Section 9 (Cha) of Section 49 of the Act, would not be declared against the Constitution.
Besides the Bangladesh Bank governor, the finance secretary, Banking Division secretary, law secretary, the comptroller and auditor general, and the central bank’s Banking Operation Division general manager have been made respondents of the rule.
http://www.weeklyholiday.net/Homepage/Pages/UserHome.aspx?ID=4&date=0#Tid=14505
A M K Chowdhury
Writing off loans means those loans which could not be recovered from the defaulters. The Central Bank introduced the loan write – off provision in 2003. A Bangla daily reported that default loans accumulated in four state – owned banks amounting to Tk.10,000 (ten thousand) crore were written – off by banks in last four years. They are: Sonali, Rupali, Janata and Agrani Bank. Sonali Bank accounted for Tk. 5,200 (five thousand two hundred) crore, Janata Bank for Tk. 2,100 (two thousand one hundred ) crore, Rupali Bank for Tk. 1,019 (one thousand nineteen) crore while Agrani Bank5,354 (five thousand three hundred fifty four) crore were written – off in 2013-16 period. (The Daily Naya Diganta, dated July 12, 2017)
Loan write–off is a ‘loss’ for the banks. For example, a bank has earned Tk. 500 crore as profit in a year. If the bank management wants to write off Tk. 100 crore default loan, the bank will have to show Tk.400 as profit after adjustment of Tk. 100 crore from the profit. The bank management has to transfer the record of such default loans to a separate register from the balance sheet, as written off loans. A bank has to adjust the write – off loans from the annual profit earned by the bank. All these loans were granted on political consideration over the years. At that time it could not be taken into consideration whether they would be able to refund loans. Moreover ‘ political consideration creates financial anomalies in approving loans. (The Holiday, dated June 22, 2012)
List of top 100 loan defaulters placed by Finance Minister
An English language daily reported that Finance Minister (FM) AMA Muhith placed a list of the country’s top 100 loan defaulters in Jatiya Sangsad (JS) and said the classified loan now stands at Tk. 1,113 b (Tk. 111,347 crore) as of April 2017 as per the data of the Credit Information Bureau (CIB) of Bangladesh Bank (BB) Of the loan defaulters two are individuals and the rest companies. The two individuals are MujiburRahman Khan and EmdadulHoqueBhuiyan. Two companies including Bismillah Towels and Jamuna Agro Chemical are in the list twice. (The Daily Observer, dated July 11, 2017)’
The same English language daily reported on the same day that state- owned Agrani Bank Has incurred a loss amounting to Tk.7 (seven) billionin the last calendar year due to rise in its non-performing loans. The amount is a huge jump from the year 2015 when its net loss was Tk.650 million. Due to financial anomalies in approving loans to different parties without assessing real scenario, the bank later could not recover its loans. As a result, its classified loans continued to rise and there was a large amount of provision against non-performing loans. The bank recorded Tk.31.17 billion in new default loans in the last year and Tk. 9.53 billion was realized at the same time.
Earlier the FM said the number of loan-defaulting individuals and companies in Bangladesh now stands at 202,623. He ,however, did not disclose how much money they owe to the banks. Default stood at Tk.734.09 billion until March accounting for 10.53 percent of the total loans disbursed, according to data from Bangladesh Bank. The FM said state bank retrieved Tk. 301.2 billion in defaults in the first three quarters of fiscal 2017. The FM further said almost 19 percent of branches of the state banks were running into losses.
Citing data updated to March 31, the FM said that of the 5,134 branches of the commercial and specialized banks run by the government, 952 ere not making any profit. (The Daily Observer, dated June 21,2017)
Another news report said Bangladesh Bank (BB) will maintain its cautionary stance in the monetary policy statement (MPS) which will be announced at the end of this month . The MPS would be finalized on the basis of the national budget for the 2017-18 financial year and the fiscal policy directions. According to the national budget the government has set the target at Tk. 28,203 crore for borrowing from the banking system. (The Daily Observer, dated July 16, 2017)
The Directors of private banks are also making a huge amount of loan available to themselves from the respective banks depriving other legitimate borrowers. As of December last, directors of 40 private banks in the country availed of Tk. 16,000 crore as loan against their (banks) total capital of Tk.582,718crore. Out of Tk. 494,919 crore the private and public banks disbursed as loan in December 2016, their directors took Tk. 100,000 crore. Of this Tk.70,000 crore went to the private bank directors.
Recovery of loan by these banks has been poor, leaving a lingering affect on the capital and luring more directors and their favored employees to take loan. The money disbursed to the directors is six times higher than borrowing by other clients. (The Daily Observer, dated May 17, 2017).
A newspaper report said client complaints are increasing day by day in Bangladesh Bank (BB), the central bank that has already received at least 4,530 complaints of irregularities and frauds of public srctor and private banks and financial institutions in 2015 – 16 fiscal year. State –owned Sonali Bank topped the list with 256 complaints against their branches. Privately operated BRAC bank was second with 175 complaints. (the Daily Observer, dated March 7, 2017).
These are the scenario of banking sector of Bangladesh. Political consideration should not be accepted for granting loans. The country’s monetary should be improved. Earlier the FM said banking system has witnessed a ‘sea – level’ looting over the years, (The Holiday, dated August 12,2016). Unless the practice of ‘sea – level’ looting is stopped, needless to say, the country’s economic development will be hampered to a great extent, the government should realize it.
The High Court questioned on 1 March this year the Bangladesh Bank’s power to write off loans and asked for a list of the business entities and individuals whose loans were waived until Dec 31 last year and the amounts, the bdnews24.com reported. The Bangladesh Bank governor will have to submit the list within 30 days. The governor was also asked to inform the court whether any of the companies or individuals were also enjoying any other loan facilities and, if so, the amount of such loans.
The High Court asked why the provision relating to “waiver of loan or part of loan” contained in Section 28 (1) of the Bank Companies Act, 1991 and the power given to the Bangladesh Bank to “waive loans”, as contained in Sub-Section 9 (Cha) of Section 49 of the Act, would not be declared against the Constitution.
Besides the Bangladesh Bank governor, the finance secretary, Banking Division secretary, law secretary, the comptroller and auditor general, and the central bank’s Banking Operation Division general manager have been made respondents of the rule.
http://www.weeklyholiday.net/Homepage/Pages/UserHome.aspx?ID=4&date=0#Tid=14505