Businesses not solely responsible for high defaults loans: BCI president

Whenever defaulted loans rise, blame is often directed at businesses, but they are not responsible for everything, said Anwar-ul Alam Chowdhury, president of the Bangladesh Chamber of Industries (BCI).

"The business environment here is not supportive. Entrepreneurs now have to take fresh loans just to repay earlier ones," Chowdhury said at a seminar on "Monthly Macroeconomic Insights", organised by the Policy Research Institute of Bangladesh (PRI) in Dhaka today.

The BCI president said the repayment period, which was previously six months, has been reduced to three months, meaning a loan is now classified as a default if it is not repaid within that time.

This change has contributed to the rise in defaulted loans, he added.

Chowdhury recommended improving law and order, resolving the energy crisis, ending mob culture, and providing policy support to businesses. Otherwise, defaulted loans will continue to rise, he added.

Presenting the keynote paper, PRI Principal Economist Ashikur Rahman said non-performing loans (NPLs) currently stand at Tk 6.4 lakh crore, nearly 36 percent of all disbursed loans, while total distressed assets may have reached around Tk 9.5 lakh crore, indicating weak asset recovery prospects.

He noted that high NPLs are creating risks of a credit crunch and weakening investment.

PRI Chairman Zaidi Sattar moderated the programme, which was attended by business leaders, economists and other participants.