Why hasn’t there been significant change in banking sector?
The banking sector is riddled with problems, among which the most alarming is the overwhelming volume of non-performing loans (NPLs). The amount of defaulted loans has increased at an abnormal rate. According to newspaper reports, as of the end of last December, the total disbursed loans in the banking sector stood at Tk. 17,11,402 crore, of which Tk. 3,45,765 crore were defaulted—accounting for 20.20% of all loans. Among these, Tk. 2,91,537.75 crore were classified as “bad loans,” which represent 84.31% of the total NPLs. Loans that fall under the “bad” category usually have very little prospect of repayment. Many banks are facing provisioning shortfalls; they are unable to maintain the required provisions even if they wish to. Thirteen banks are currently under-provisioned, and the total shortfall across the banking sector amounts to Tk. 1,06,130 crore.
