Four state-run banks in Bangladesh are finding it difficult to recoup loans from their top 20 defaulters, a failure that has worsened their financial health and squeezed their capacity further to lend.

The Bangladesh Bank’s policy that allows defaulters longer repayment tenures and easy terms and access to fresh funds has appeared to have failed to make major inroad in bringing down bad debts as rescheduled loans are even turning sour. 

Banks’ loan recovery in the first quarter of 2019 was 9.68 percent higher than a year earlier, but given the extraordinary rate at which default loans are increasing it seems below par.

According to a report published in a leading Bangla daily, four State-owned banks (SoBs) including Sonali, Agrani, Janata and Rupali have piled up bad loans to the tune of Tk 5,867 crore.