Bangladesh now tops Asia in defaulted loans country
After the fall of the Awami League government in August last year, hidden defaulted loans in the banking sector have been coming to light. Again, loans of Awami League leaders and businessmen close to them are also becoming defaulted. As a result, the defaulted loans of Bangladesh’s banking sector have increased from 12 percent to over 28 percent in a span of one year. This means that more than a quarter of the loans distributed by the banking sector are now defaulted. And that is why Bangladesh is now at the top of the list of Asian countries in defaulted loans.
A recently published report by the Asian Development Bank (ADB) has highlighted the fact that Bangladesh has risen to the top among Asian countries in terms of defaulted loans. This report has been prepared based on the status of various financial indicators of countries in the Asia and Pacific region. However, the data for 2023 has been taken into account in the comparison of defaulted loans. Bangladesh is at the top.
According to the ADB report, Bangladesh has the highest rate of non-performing loans among South Asian countries. The rate was 9.6 percent at the end of 2023. According to the ADB report, Bangladesh’s non-performing loan rate has increased every year since 2021. In 2021, this rate was 8 percent, and in 2022, it increased to 8.7 percent. Among South Asian countries, like Bangladesh, defaulted loans have increased in Nepal and Sri Lanka since 2021. Defaulted loans in the rest of the countries have decreased. India’s non-performing loan rate was 7.9 percent in 2020, which decreased to 1.7 percent in 2023. Maldives’ non-performing loan rate decreased from 18.8 percent to 8.3 percent during this period. According to the ADB report, Chinese Taipei and Hong Kong have the lowest default rates among Asian countries. And Kyrgyzstan has the highest default rate after Bangladesh. However, the country’s default rate is decreasing.
Bangladesh Bank officials say that money that was withdrawn anonymously from banks during the previous Awami League government is now starting to be identified as defaulters. Also, the default rate in the country is increasing due to the upgrading of the default rate to international standards.
When the Awami League formed the government in 2009, the total defaulted loans were only Tk 22,481 crore, and after that, the amount of defaulted loans has been increasing. Economists have long been complaining that influential figures close to the Awami League government are siphoning off huge amounts of money from banks through various irregularities, a large portion of which has been laundered abroad.
It is learned that about 1,400 defaulting institutions have applied to Bangladesh Bank for loan restructuring. Of these, Bangladesh Bank has decided to regularize the loans of about 300 institutions. However, interest will have to be paid during the grace period. Bangladesh Bank officials hope that this will reduce defaulted loans.
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