THE volume of non-performing loans has increased by Tk 745.7 billion in the January鈥揗arch quarter, taking the total to a record high of Tk 4,200 billion and the figure accounts for 24.13 per cent of the total outstanding loans, by far the highest in South Asia. Whilst this has happened, banks which have already identified more than 1,500 wilful defaulters, the borrowers who have the financial ability to repay the loans but deliberately choose not to do so, the Bangladesh Bank appears indecisive about taking action against such defaulters. The central bank鈥檚 inaction about wilful defaulters has allowed them to operate without facing consequences. Economists seek to say that even after the overthrow of the authoritarian government of the Awami League, toppled in an uprising on August 5, 2024, the culture of secrecy and protection for loan defaulters, largely blamed for the deplorable proposition of non-performing loans, worryingly persists. Bangladesh Bank officials say that no major business groups have appeared on the list of wilful defaulters that the central bank has. This also leaves an issue to see if banks may not have enlisted large wilful defaulters for any reasons.
The central bank, as the officials say, has not made any decision on sending the names of the wilful defaulters that it has to relevant public agencies for further action such as the imposition of restrictions. The Bank Company Act (Amendment) 2023 entails that the central bank may send the list to agencies such as the Bangladesh Securities and Exchange Commission or the Office of the Registrar of Joint Stock Companies and Firms, recommending restrictions on overseas travel, trade licence acquisition or business registration by the defaulters. The law also provides for the imposition of further restrictions on defaulters from buying cars, land or houses or receiving government recognition or awards. The central bank issued a circular on March 12, 2014, laying out that it would share such lists with public agencies, but it has failed to act on its commitment although the rules were put into force on July 1 that year. A central bank executive director, who is also the agency鈥檚 spokesperson, says that it is the responsibility of the banks to first identify wilful defaulters and act on the lists keeping to the due process before filing criminal cases against them.
The government has so far restructured the boards of 14 banks. But only this, coupled with the removal of corrupt of politically connected directors, is a commendable step towards restoring democratic governance in the banking sector but targeting only the bank owners would hardly work. The central bank should hold all wilful defaulters to account.
