The central bank has taken a firm stance to reduce the sharp rise in loan defaults across the country’s banking sector. Despite offering facilities such as loan rescheduling, restructuring and one-time settlement, the regulator has questioned why defaulted loans have not decreased. Banks have also been instructed to bring down non-performing loans significantly within the current month.

At Sunday’s bankers’ meeting, attended by managing directors and chief executives of all banks, Governor Ahsan H. Mansur and the deputy governors expressed serious concern over the rapid escalation of defaults. It was revealed that since the fall of the previous government, defaulted loans had increased by nearly Tk 4.5 lakh crore. Stricter loan policies, corruption, absconding businessmen, and reputable entrepreneurs turning into defaulters have all contributed to the worsening scenario.

The meeting noted dissatisfaction over declining loan growth in the agriculture and SME sectors, encouraging banks to expand credit to these areas. Several managing directors of private banks told a national newspaper that loans were previously classified as defaulted for even minor issues. Now the central bank believes this practice is damaging the country’s global financial reputation and limiting banks’ ability to extend new credit.

According to the data presented, loans of Tk 50 crore and above total Tk 10 lakh 52 thousand crore—62.59 per cent of all bank lending. Of the total defaulted loans, 77 per cent are held by large borrowers. Collateral against these loans amounts to only Tk 2 lakh 85 thousand 197 crore, or just 27.11 per cent.

Between April and June, banks filed 14,652 cases to recover nearly Tk 97 thousand crore in defaulted loans. As of now, Tk 4 lakh 7 thousand 435 crore remains blocked in litigation. The number of cases in money loan courts has risen to 2,22,341.

The meeting also reviewed a report on special long-term rescheduling facilities. The central bank’s five-member committee received 1,516 applications involving Tk 1 lakh 96 thousand 47 crore. The top 20 business groups sought rescheduling of over Tk 1 lakh 10 thousand crore. So far, 900 applications from 300 entrepreneurs have been resolved, rescheduling Tk 26,114 crore and reducing defaults by Tk 13,747 crore.