Cash recovery from loan defaulters to spur economic growth: AB Bank Managing Director

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The recovery of a sheer bulk of default loans – currently overwhelming the banking sector – will spur economic growth, according to AB Bank president and managing director Tarique Afzal.
The move, on one hand, will help banks focus on improving credit which is critical for ramping up investments, and on the other hand, it will unlock trapped capital in inefficient firms.
The seasoned banker said this in an exclusive interview with New Age recently.
Tarique Afzal says that a speedy disposal of default loan cases in Artha Rin Adalat (Money Loan Court) would see a 40 per cent drop in such loans that currently stand at more than Tk 1 lakh crore.
‘A 40 per cent decrease is a big one, and the banks could easily distribute new loans with the recovered money,’ he pointed out.
‘This will work as a stimulus to the country’s economy,’ according to Tarique who has been steering the country’s first private bank since 2019.
He, however, gave vent to his frustration over the current status of Artha Rin Adalat where some 21,000 default loan cases are under trial despite settlement of about 12,000 cases.
Describing his own experience in recovering AB Bank default loans through Artha Rin Adalat, he said that there were bottlenecks in settling such cases in absence of dedicated courts.
The country’s first private bank – AB Bank – was struggling with some 33 per cent default loans in 2019 when Tarique Afzal assumed the top post of the bank.
The amount had been reduced to 13 per cent by 2022.
‘By the end of this year, the amount will come down to a single digit,’ Tarique hopes, adding that they have taken a number of steps to strengthen the bank’s position.
An extension of collateral-free loan to farmers through smart cards is one of such measures taken against the backdrop of current government policy to bring all available land under farming for ensuing food sufficiency.
Such loans for farmers — who will identified by the help of Department of Agricultural Extension and local administration — range from Tk 50,000 to Tk 3,00,000.
AB Bank has already distributed a total of 10,000 smart cards among farmers as part of its strategy to set foot in rural landscape in order to create new entrepreneurs and products after operating in urban areas over the past 40 years.