Abstract
Non-performing loan (NPL) is the recent burning issue and great challenge for the banking sector. Banks play very important role for economic enhancement of a country. They provide funds to the deficit units for business, production & development activities. But when banks fail to recover loan, then it becomes to non-performing loan. In Bangladesh, state owned commercial banks (SOCBs) are the worst and private commercial banks are lest sufferers from non-performing loan. This paper tries to represent the non-performing loan status of banks operating in seven districts under Rangpur division. This study is descriptive and based on secondary sources. The aim of this paper is to present the non-performing loan scenario and recovery status of the mentioned area and to provide recommendations for mitigating non-performing loan in Rangpur region. Keywords: Non-performing loan(NPL) , Economic enhancement, State owned Commercial Banks (SOCBs), Private Commercial Bank (PCBs) etc. DOI: 10.7176/EJBM/12-7-09 Publication date: March 31 st 2020
Highlights
Non-performing loans refer to those loans from which banks no longer receive interest and/or installment payments as scheduled
Non-performing loan (NPL) is very high in state owned commercial banks (SOCBs) rather than PCBs in Rangpur region (Table-1)
From this study it was found that t reasons behind non-performing loans are pressure from political parties, poor monitoring & controlling system of SOCBs, improper management, concentration on a particular area, improper sanctioning, lack of timely action, delay in disbursement of credit, unwillingness of borrowers etc
Summary
Non-performing loans refer to those loans from which banks no longer receive interest and/or installment payments as scheduled. It is a loan for which the principal or interest payment remained overdue for a period of time. NPLs are known as Non-performing because the loan ceases to “perform” or generate income for the bank. NPLs can be viewed as a typical byproduct of financial crisis. They are not a main product of the lending function but rather an accidental occurrence of the lending process, one that has enormous potential to deepen the severity and duration of financial crisis and to complicate macroeconomic management (Woo,2000)
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