Why do bad loans keep getting worse?

Last Updated on August 22, 2023 9:23 am

At this point, the issue of default loans in Bangladesh is well-known. It is truly a mark on our economy how we continue to be bogged down by them.
The latest is that default loans of both public and private banks worth Tk207,000 crore are stuck in lawsuits, compounding the default loan problem in the country’s banking industry.
In recent years, Bangladesh has certainly made commendable strides in economic development, but the escalating crisis of bad loans threatens to cast a long shadow over the nation’s economic progress.
Financial institutions are the lifeblood of any economy, and when a substantial portion of their assets turns toxic, it jeopardizes their stability. This, in turn, reduces their capacity to provide loans to businesses and individuals, hindering economic growth.
The issue of bad loans is a ticking time bomb for any economy, and Bangladesh is no exception. It is high time we address this issue with utmost seriousness and devise concrete strategies to mitigate its impact.
First and foremost, regulatory bodies must enhance their oversight of lending practices. Furthermore, the legal framework for loan recovery must be strengthened. Timely resolution of bad loans is crucial to prevent them from ballooning.
And most importantly, it is the culture of impunity in the country that must be eliminated. If we are serious about being a developed nation in two decades, we cannot continue to shelter those who hurt our economy over and over again.
Fixing the issue of bad loans is a formidable challenge that Bangladesh must confront head-on. Failing to do so could derail the nation’s economic progress and undermine the stability of its financial sector.

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