Kamal plays down default loan worries | The Daily Star
12:00 AM, November 14, 2019 / LAST MODIFIED: 01:50 AM, November 14, 2019

Kamal plays down default loan worries

The total amount of default loans in Bangladesh has not increased when compared with the situation in 1991, Finance Minister AHM Mustafa Kamal told the parliament yesterday.

In 1991, the total amount of default loans was Tk 5,039 crore out of the total disbursed amount of Tk 19,278 crore. This means default loans had accounted for 26.14 percent of total outstanding loans then.

At present, the total disbursed loan amount is Tk 962,277 crore and the defaulted amount is Tk 112,425 crore, meaning the bad loan ratio is 11.69 percent.

“That means, the amount of default loans has not increased,” he said.

The finance minister’s comment comes at a time when banks are facing liquidity crisis in the wake of rising default loans. Many banks are struggling to maintain required provision against their bad loans. The International Monetary Fund and think-tanks have expressed their concern about the matter.

Kamal, however, said there should not be any default loan in Bangladesh.

“It would be better if we could bring down the percentage of the default loans to single digit.”

The finance minister said some default loans were created due to problems in the system.

He also said the bank interest rate is high due to the applying the compound interest rate formula instead of simple rate.

The financial institutions division of the finance ministry has asked all banks to form a cell to ensure close monitoring on classified loans of Tk 100 crore and above.

The  minister said the Bangladesh Bank is also monitoring the savings and loan interest rates every month while it also putting pressure on the banks to reduce their loan interest rates.

In response to a question from the main opposition Jatiya Party MP Kazi Firoz Rashid, the finance minister said the tax payment process would be made totally hassle-free from this fiscal year as the system would be made automated soon.

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