Non-performing loans in Banking Sector of Bangladesh Causes and Effect

Abstract

A non-performing credit (NPL) is the entirety of obtained cash whereupon the account holder has not made his booked installments for most recent 90 days at any rate. A non-performing advance is either default or near being in default. Once an advance is non-playing out, the chances that will be reimbursed in full are thought to be generously lower. It is normal experience for managing an account industry in Bangladesh. In 1999 the rate of non-performing advances was 41.1%. In any case, now the rate is 11.90%. The measure of NPLs expanded to taka 73.3 billion out of 2012 from taka 47.3 billion out of 2003. There are numerous explanations for the NPLs in Bangladesh. The main ground is business person co referent. Freeloader might be have absence of familiarization, absence of business data and absence of institutional preparing foundation or absence of encouraging offices. Be that as it may, once in a while borrowers do it deliberately. Business person's age is likewise a critical certainty. Second reason is business related. Here and there bank offers credit to that business which is not that much alluring. Solid rivalry could be another business related reason. Business could be defaulter in light of low marker share. Third ground is driving cognate. It is chiefly bank's blame. Credit could be default if Bank postponed evaluation of advance proposition, deferred payment of store and absence of appropriate checking. Last explanation for NPLs is macroeconomic factor. Low GDP development, Increasing violations, Hartals, Flood and regularly approach changes impacts credit. Hence credits move toward becoming default advance.