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Volume:8, Number:04
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Business & Finance 1
THIS WEEK

Credit Card Defaulters

Three banks lead the top-10 chart of credit card defaulters, although the size of each loan involved is small, not exceeding BDT10 million

| Mahfuza Hridi |

The banks leading in consumer banking, particularly in credit card business, have the highest number of loan defaulters as these loans are mostly disbursed without mortgage. The bank authorities are not worried about these loans because they are small in size. However, they have to prepare separate files to take legal action against each of the defaulters.

According to the Credit Information Bureau (CIB) of Bangladesh Bank, BRAC Bank is leading in terms of the number of loan defaulters followed by multinational Standard Chartered Bank, and local banks The City Bank and Eastern Bank. Rajshahi Krishi Unnayan Bank (RAKUB) also has entered the top 10 chart of the banks with huge defaulters though it disburses small loans to farmers only. The chart also includes Pubali Bank, Prime Bank, Agrani Bank, Uttara Bank, and United Commercial Bank.

About this situation in the banks with credit card business, City Bank additional managing director Mashrur Arefin said 5 percent of the credit card holders of the bank are defaulters. The consumer banking clients also are becoming loan defaulters in significant number, he said, adding that the due amounts are not that big. He said the banks are not much worried about the consumer or credit loan defaulters as none of them borrowed more than BDT1 million. Many of them received loans to the range of BDT20,000 to BDT30,000. However, a bank falls in trouble when a big client becomes defaulter, Mashrur added. There were about 877,000 credit cards active in January this year. Of them, The City Bank had 208,000 credit card holders, Eastern Bank and Standard Chartered Bank had 150,000 each, while BRAC Bank had 103,000 credit card clients. According to the Bangladesh Bank data, the number of BRAC Bank loan defaulters was 39,962 till March of this year, who owed the bank BDT652. The number of loan defaulters soared as the private sector bank opted for aggressive loan policy for small and medium range enterprises (SME). The bank also aggressively disbursed loans to retail consumers, the central bank data disclosed.

Standard Chartered Bank ranked 2nd with 30,346 loan defaulters, who owed BDT4.63 billion to the bank till March. Most of them defaulted on credit card and retail consumer loans. Credit Card Defaulters Three banks lead the top-10 chart of credit card defaulters, although the size of each loan involved is small, not exceeding BDT10 million The City Bank’s 16,549 defaulters, who are mostly credit card and retail consumer clients, owed BDT1,214 to the bank. There are also some big debtors who became defaulters. The Eastern Bank follows the three banks with 12,433 defaulters and BDT6.19 billion yet to be realized. RAKUB ranked 5th on the chart though it has no credit card or consumer banking program. Its 10,910 loan defaulters owed the bank BDT10.05 billion. The Pubali Bank owed BDT11.75 billion from 10,062 loan defaulters till March. Its several big clients also have turned defaulters besides the small amount loan receivers. The 9,220 defaulters of Prime Bank owed BDT11.47 billion to the bank.

State-owned Agrani Bank had 8,600 loan defaulters with BDT60.86 billion to be realized from them. The largest chunk of the amount remains unpaid by big clients. Corruption spread in the bank during 2012-2015 period. The loan receivers during the period turned defaulters ultimately. The Bangladesh Bank had removed the then managing director, Syed Abdul Hamid, of the bank on the charge of corruption.

Uttara Bank’s 7,689 loan defaulters owed the bank BDT7.20 billion, while the 7,655 loan defaulters of United Commercial Bank owed BDT18.29 billion to the bank. According to the Bangladesh Bank data, there were a total of 202,623 loan defaulters in the country with whom BDT734.09 billion money is left unrealized till March this year. Former Bangladesh Bank deputy governor Khondkar Ibrahim Khaled alleged banks are not properly following rules concerning loan allocation. And so the debtors become defaulters. The banks should be more transparent in disbursing loans, he added.

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