NBFIs' default loans on the decline :: Financial Express :: Financial ...

Rezaul Karim

The amount of default loans of the country's non-banking financial institutions (NBFIs) has declined.

This decline is mainly attributable to better loan recovery efforts by the management personnel of NBFIs, concerned sources said.

Moreover, there has been a continuous monitoring by the central bank, said a BB official.

The default loans decreased by 1.91 per cent in the fourth quarter (Q4) of last calendar year from their Q3 level, according to the Bangladesh Bank (BB) statistics.

The default loans of NBFIs fell by 7.38 per cent to Taka 17.28 billion in the Q3 of 2012 and further by 5.47 per cent to Taka 13.69 billion in Q4 of the year, representing 13.69 per cent of their outstanding amount of lease finance on December 31, 2012, statistics showed.

In absolute terms, the volume of default loan, however, increased to Taka 13.69 billion at year-end in 2012 from Taka 10.32 billion at the end of the previous calendar year. This increase was 0.77 per cent on year-to-year (y-o-y) basis, largely because of expansion of lease finance, in aggregate amount of funds, that was extended to the lessees.

Generally, the default loans and lease finance of both banks and the NBFIs respectively decrease in Q4 of every calendar year due mainly to a high level of recovery performance, a senior NBFI official told the FE on Friday.

According to another source, most rescheduling of loans or lease finance is also done by banks and NBFIs in the last quarter before the end of their closure of respective annual books of accounts to "portray" a comparatively better picture about non-parforming loans (NPLs)

The Bangladesh Leasing and Finance Companies Association sources, however, said: "The default loan situation has improved, thanks to close monitoring and high recovery rate by every NBFI."

But the amount of default loans might increase in the upcoming quarter of the current calendar year because of energy shortages, weak infrastructures and poor law and order situation and political unrest, they said.

On December 31, 2012, the total outstanding lease finance operations by the NBFIs amounted to Tk 250.41 billion. The amount was Tk 219.63 billion in 2011, data showed.

The disbursement of loan/lease funds rose by Tk 16.25 billion in the last quarter ending on December 31, 2012 over the previous quarter up to September 30, 2012.

At present, 31 NBFIs are operating in Bangladesh.

Source: http://www.thefinancialexpress-bd.com/index.php?ref=MjBfMDNfMTdfMTNfMV8xXzE2MzQyNw==

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