NPLs in Non-Bank Financial Institutions surge to Tk 247b by Jun 2024
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Non-performing loans (NPLs) in the country’s non-bank financial institutions (NBFIs) surged to over Tk 247.11 billion by the end of June 2024, according to the latest data from Bangladesh Bank (BB).
The data revealed that NPLs accounted for 33 per cent of the sector’s total loan portfolio.
By the end of June 2024, total loan disbursements in the sector had reached over Tk 745.34 billion, while non-performing loans increased by Tk 8.22 billion over the previous three months, acccording to the BB.
Industry insiders noted that both weaker and stronger non-banking financial institutions are now struggling with loan defaults, leading to a continuous rise in NPLs across the sector.
They see liquidity crises, fierce competition with banks, and reputational damage caused by irregularities as key reasons for this issue.
It is due to these reasons that institutions are finding it hard to attract deposits, they said, adding that borrowers are also finding it difficult to repay loans due to poor business conditions.
As of June 2024, outstanding loans in the non-banking financial sector stood at over Tk 745.34 billion, with Tk 247.11 billion categorised as non-performing, representing 33.15 per cent of total loans.
In comparison, at the end of March 2024, outstanding loans totalled Tk 743.89 billion, with NPLs amounting to Tk 238.89 billion or 32 per cent of total loans.
Over the past six months, NPLs surged by Tk 31.44 billion, an increase of 14.57 per cent.
By the end of June, irrecoverable or bad loans had reached Tk 210.33 billion, accounting for 28.22 per cent of total disbursed loans, up from Tk 200 billion at the end of March, when bad loans made up 26.91 per cent of total loans.
Md Golam Sarwar Bhuiyan, Managing Director of Industrial and Infrastructure Development Finance Company (IIDFC) told the FE that challenges in the overall economy are contributing to rising NPLs, as borrowers increasingly struggle to repay loans on time.
He also noted that some financial institutions, unlike banks, have failed to regularise rescheduled loans, further contributing to the increase in non-performing loans.
Additionally, BB’s closer scrutiny has brought hidden NPLs to light. While some good institutions have seen temporary setbacks, those with robust boards and management are expected to recover, he said.
He added that some NBFIs are taking action and filing cases to recover loans, which is a positive development for the sector.
Meanwhile, deposits in non-ban financial institutions rose to Tk 451.16 billion in the April-June quarter from Tk 443.04 billion in the previous quarter, despite over 48,000 depositors leaving the sector during this period.