Published in The Daily Sun on Saturday, 25 November 2017
Loan takeover ups default risks
Jannatul Islam
The loan takeover culture has created risks of increase in bad loans as the country’s banking sector lacks skilled human resources to manage big loans, economists and bankers said.
Transfer or takeover of a loan happens when the entire unpaid principal loan amount is transferred to another bank.
A recent study of Bangladesh Institute of Bank Management (BIBM) revealed that around 50 percent of bankers think the loan takeover culture has created risks of rise in bad loans.
According to BIBM data, loans amounting to Tk 4,339 crore was transferred or taken over in the January-September period of this year while the amount was Tk 8,161 crore last year.
Bangladesh Bank former Deputy Governor Khondkar Ibrahim Khaled said the banks are struggling with some loans as the approvals to the loans were influenced by some politically-blessed individuals in bank boards.
“Most of transfers or takeover of loans in our country are taking place for ill purposes, especiallybased on political influence.
We should be aware of this,” Ibrahim Khaled told the daily sun on Friday.
He emphasized on raising awareness on this loan takeover issue so that the bankers are made to transfer any loans for the betterment of the institutions rather than personal and political interest.
Centre for Policy Dialogue(CPD) Distinguished Fellow Prof Mustafizur Rahman said the loan takeover process remain a window dressing in the banking sector as there is a lack of skilled managerial workforces in the banking sector.
“Loan takeover is a good process to regularise the bad loans in other countries. However, in our country, the method is failing for the lack of skilled workforce in big loan management,” Prof Rahman told the daily sun.
Prof Rahman also mentioned that the increasing number of loan takeover will aggregate pressure in the banking sector.
“We have been continuously demanding an independent Banking Commission which can address those issues,” he said.
By end of the third quarter of this year, the figure of bad loans stood at Tk 80,307 crore which was Tk 65,731 crore in the same period of 2016. In the last three months, the banks released Tk 6,159 crore in loans.