MD MEHEDI HASAN

Defaulted loans at the country’s non-bank financial institutions (NBFIs) reached a record 36 percent of all loans disbursed by them as of September 2024, a level that sector people described as a reflection of “massive irregularities and scams” seven to eight years ago.

As of September 2024, the 35 NBFIs held Tk 26,163.19 crore in bad loans, which amounted to 35.52 percent of their total disbursed loans of Tk 73,662.77 crore, according to Bangladesh Bank (BB) data.

These bad loans in the sector are the “legacy of the massive irregularities and scams that took place seven to eight years ago”, said industry insiders.

Referring to a BB probe report, they said former managing director of NRB Global Bank (later renamed Global Islami Bank) PK Halder swindled at least Tk 3,500 crore from four NBFIs.

Those non-bank commercial lenders are: People’s Leasing, International Leasing, FAS Finance and Bangladesh Industrial Finance Company Limited (BIFC).

Consequently, these four NBFIs became ailing institutions with more than 90 percent of their loans turning bad.

Industry insiders said that the central bank bears responsibility for the current state of the NBFI sector due to inadequate supervision.

Non-performing loans (NPLs) at the NBFI sector stood at Tk 21,658 crore, or 29.75 percent of their disbursed loans, at the end of September 2023. It rose by 21 percent, or Tk 4,505.04 crore, to Tk 26,163.19 crore by September 2024, BB data shows.

“The majority of the defaulted loans are legacy loans, which were disbursed without adequate security,” said Kanti Kumar Saha, chief executive officer of Alliance Finance.