Due to the epidemic of Corona, the loan repayment discount continued in 2021. Even after that, the defaulted debt could not be curbed. Although the full-year figure is not available, the defaulted loan has increased by about 12 thousand crore rupees in 9 months. At the end of last September, the defaulted debt again exceeded one lakh crore rupees. The International Monetary Fund (IMF) has also expressed concern over the rise in defaulted loans. In addition to defaulted loans, the company also raised questions about the central bank’s calculation of foreign exchange reserves. Debt in the private sector has been slow throughout the year.
Apart from this, there was uneasiness about the fall in remittance income, appreciation of the dollar, nine-six interest. Apart from this, 2021 witnessed many shocking incidents including irregularities in some banks and financial institutions, layoffs of employees on various pretexts, questioning of bank recruitment exams.
Due to Corona, traders get special benefits in repaying loans throughout the year 2020. As a result, no one became a defaulter without paying the loan installments at that time. Although this special facility was not maintained in 2021, Bangladesh Bank continued to provide discounts on loan repayment. According to the existing decision, if 25 percent of the installment is paid between January 1, 2021, and December 31, then the loan cannot default till December 31. Despite this, defaulted loans have increased in the banking sector.
According to the report of Bangladesh Bank, at the end of September 2021, the total loan balance of the banking sector was 12 lakh 45 thousand 391 crores 57 lakh taka. Of this, one lakh and one thousand and 150 crore rupees became defaulters, which is 8.12 percent of the total disbursed loans. In December 2020, the defaulted debt was Tk 8,734 crore or 8.6 percent. This means that as of 9 months of the current year, the defaulted debt has increased by about 12 thousand 417 crores.
Expatriate income is a relief in the first part, discomfort in the last part
From July 1, 2019, a 2 percent incentive is being given for sending remittance income through banking channels. This facility has been maintained in the current financial year as well, but now despite the improvement in the Corona situation, remittance inflows are declining. This is one of the indicators of a declining economy since last May. In November, the country’s expatriate income was only ১৫ 1.5 billion, the lowest in the last 18 months. This is 25 percent less than the same period of the last financial year and 5 percent less than the previous month.
The dollar market was volatile
The dollar remained stable in the same place for more than a year during the epidemic. However, as the Corona situation improved, the dollar crisis in the market was created by the abnormal increase in imports amid a steady decline in remittance income from the middle of the year. As a result, the dollar started appreciating against the rupee in August. In just four months, the rupee has lost about one rupee against the dollar. On November 14, the dollar rose to 85 rupees 70 paise in the interbank market. And the price in the open market is about 91 rupees. The central bank increased dollar sales in the market to prevent the devaluation of the rupee against the dollar. In the four months from August to November, about 203.2 million dollars were sold to the banks. The amount in Bangladeshi rupees is about 16 thousand 435 crore rupees.
The slowdown in private debt
Private debt has been slowing down for a long time due to various reasons. In the middle of the year, due to the impact of the epidemic Corona, it sank to the bottom. In May, the annual debt growth was only 8.55 percent, which was the lowest in the history of Bangladesh. However, as the Corona situation improves, debt growth begins to pick up speed from July, but it is lower than expected. Last June, the sector’s annual debt growth was 7.35 percent. It rose to 6.38 percent in July, 8.42 percent in August, 6.7 percent in September, and 9.44 percent in October. This growth has been based on regular loans as well as incentive loans.
Discomfort with nine-six interest
To increase private investment, interest rates on all types of loans have been fixed at 9 percent from April 1, 2020. Outbreaks appear to be exacerbated during this time. As a result, the interest rate on loans of many banks has come down to 6-7 percent. Banks are also discouraging depositors by reducing the profit (interest) on deposits as there is no demand for loans. Until mid-2021, the picture was almost the same. In view of this, Bangladesh Bank fixed the minimum interest rate on term deposits last August to protect the interests of general depositors. Some banks do business by raising funds at relatively low-interest rates from interbank call money in the spirit of making quick profits without raising interest rates on deposits. As the Corona situation improves, demand in the economy builds up towards the end of the year, creating a cash crunch at the interbank market. Some banks are also facing a liquidity crisis. As a result, all types of interest, including call money, start rising again.
The leaking of question papers by five government banks at the end of the year has sparked widespread criticism. The examination was held on November 8 under the Bankers Selection Committee of Bangladesh Bank. 1 lakh 17 thousand 428 job seekers took part in it against one thousand 511 posts. It was alleged that the question papers were leaked immediately after the examination. Several candidates complained that printed answers to 100 questions were found on Facebook as soon as the exam was over. The banker selection committee of the central bank canceled the examination after such allegations were raised.