Special Correspondent :
Experts on Tuesday expressed serious concern over the rising banking sectors' non-performing loans. They said it is happening only due to lack of good governance in the banking sector.
The amount of non-performing loans (NPLs) jumped up by over 20 per cent or Tk 15,037 crore at the end of June this year from December last year.
A Bangladesh Bank data shows, the amount of NPL stood at to Tk 89,340 crore as of June 30, 2018 from Tk 74,303 crore as of December 31 last.
"Swelling NPL is a major concern for the banking system. The adverse effect arising from NPL could be huge on banking sector as well as economy," former BB Governor Dr Salehuddin Ahmed told The New yesterday.
He said bad governance and corruption plague the banking sector and it is thereby pushing up the bad loans. Lack of proper oversight by the regulator is also responsible for the situation.
"Banking sector beleaguered with NPLs due to governance failure and mismanagement," former BB Deputy Governor Dr Khondoker Ibrahim Khaled told The New Nation.
He said public sector banks constituted a major portion of the banking sector's NPL as a result of large loan scams.
"State-owned banks are facing image crisis due to large loan scams.
Inefficiency of politically appointed directors and improper loan approvals are responsible for the repeated loan scams," he observed.
The total amount of NPLs with six state-owned commercial banks (SoCBs) rose to Tk 42,852 crore from Tk 37,326 crore on December 31 last. It was Tk 43,685 crore in the first quarter of 2018, shows the BB figure.
"Fundamental governance reforms should be brought in public banks to improve their financial conditions. But the best option could be leading them to path of privatization," said Dr Ibrahim Khaled.
BB figure shows that the total amount of NPLs with 40 private commercial banks (PCBs) reached Tk 38,975 crore as of June 30 last from Tk 29,396 crore in the last quarter of 2017. It was Tk 37,289 crore as of Marc h 31 last.
The NPLs from nine foreign commercial banks (FCBs) rose to Tk 22.710 crore during the period under review from Tk 21,540 crore in December 2017. It was Tk 21,880 billion in the first quarter of 2018.
When asked, BB spokesperson Md Serajul Islam said that the central bank is continuously monitoring the lending practices by banks with a view to contain the volume of banking sectors' bad loans.
"Banks have been asked to take effective measures to reduce NPLs through strengthening their recovery drives," he added.