We demand exemplary punishment for loan defaulters

The problem of unpaid or defaulted loans in the country’s banking sector is nothing new. Although it has persisted for years, hardly any effective steps are taken to resolve it. In this regard, a study by the International Monetary Fund (IMF) stated that one-third of the loans disbursed in Bangladesh are defaulted.

According to reports published in the media, loans disbursed through irregularities during the tenure of the former Awami League government are now turning into defaults. In particular, this situation has arisen as many businessmen known to be close to top leaders of the ousted party have failed to repay their loans. At the end of last March, defaulted loans in the banking sector rose to Tk 4,20,334 crore, which is 24.13 per cent of the total disbursed loans. In other words, nearly one-fourth of the total loans disbursed by the banking sector have already defaulted.

Notably, according to the latest data from Bangladesh Bank, in just three months—or compared to December—defaulted loans increased by nearly Tk 1 lakh crore in March. On a year-on-year basis, the amount has increased by Tk 2,38,039 crore. In December, defaulted loans stood at Tk 3,45,765 crore, which rose to Tk 4,20,334 crore by the end of March. That means defaulted loans increased by Tk 74,570 crore in three months. Earlier, at the end of September last year, defaulted loans were Tk 2,84,977 crore.

It has been observed that some large industrial groups have profit-making enterprises but still become loan defaulters by not repaying bank loans. One of the main reasons is the illegal transfer of profits abroad. Economists say these defaulters are laundering huge sums of money abroad through over-invoicing. At the same time, they have raised questions about the inactivity of regulatory bodies in the commercial and financial sectors on this issue. Bangladesh Bank itself has stated that massive over-invoicing has occurred in import letters of credit.

In the past, we have seen that even when loan defaulters embezzled thousands of crores of taka, there were no examples of exemplary punishment. Although the interim government has spoken of exemplary punishment for these defaulters, no visible action has been taken yet. As a result, the unhealthy competition of taking loans from banks and not repaying them continues across the country.

Foreign money laundering and defaulted loans are widely blamed for the economic crisis in the country. Still, it is unclear why the government is following a lenient policy towards loan defaulters and money launderers. In most cases, it has been seen that those involved in money laundering and loan defaulting are politically and socially influential. Therefore, concerned parties believe there is a lack of effective government measures to recover these defaulted loans and repatriate money from abroad. Thus, unless effective and strict action is taken against loan defaulters now, there is a risk of a severe economic crisis in the country.