Default loans declined 0.4 percentage points to 10.13 percent in second quarter of the year thanks to spirited performance by state banks in recovery.

At the end of June, the total default loans stood at Tk 74,148 crore, according to data from the Bangladesh Bank.

“Though the default loan rate decreased it is still in double digits, which is alarming for the industry,” said Mohammed Nurul Amin, managing director of Meghna Bank.

The default loan rate would have come down to single digit if the state banks put in more effort in loan recovery, he added.

State banks though managed to trim their default loans by Tk 1,135 crore in the second quarter to Tk 34,580 crore.

The private banks though saw their default loans increase 6.73 percent to Tk 31,728 crore during the quarter.

“The rise in default loans of private commercial banks in the second quarter is seasonal as recovery efforts tend to be slow in middle of the year,” said Anis A Khan, managing director of Mutual Trust Bank.

During this time of the year, banks give more priority to business expansion, he said.

But the default loans will invariably decline at the end of the year, when banks go into loan recovery mode, he added.

The default loans of two specialised banks, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank, declined 2.92 percent to Tk 5,518 crore at the end of June.

The foreign banks' default loans increased 1.67 percent to Tk 2,320 crore last quarter.