World Economy

Bangla Bad Debt Growing Fast

Bangla Bad Debt Growing FastBangla Bad Debt Growing Fast

The study by LR Global Bangladesh says the country has the highest share of non-performing loans and lowest capital adequacy ratio, compared to its peer economies. Bad debt grew faster than credit in the last five years, according to the asset management firm, an affiliate of New York-based LR Management Investments, bdnews reported. The aggregate credit grew at a compound annual growth rate of 13% between 2012 and 2016, mostly in tandem with the nominal GDP growth. By the end of 2016, non-performing, restructured and rescheduled loans stood at 17% of total outstanding loans, according to the report. The high loan defaults mean that the financial sector lacks the funds to absorb any sudden deterioration of asset quality, the report says. It says non-performing loans grew at a faster pace in private banks than in the state-owned lenders in the last five years. The state banks have failed to improve their capital position, asset quality and profit scenario despite recapitalization by the government in the past nine years.


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