Probashi Kallyan Bank (PKB), is facing significant challenges in loan recovery from outbound workers, resulting in a surge in classified loan ratios from 7.5% to 15% in FY24. The increase in classified loans, which are at risk of default, is attributed to migrant borrowers’ difficulties in paying installments on time, unsuccessful migration, overseas joblessness, and low wages. This spike is also linked to the expiration of a waiver from the Bangladesh Bank that allowed PKB to classify loans within the microcredit system.
Many outbound workers are struggling to secure employment, face underpayment, or become undocumented, making it challenging to remit loan payments. PKB has applied for an extension of the waiver to manage loan classifications effectively. The bank’s loan recovery rate currently stands at 70%, with a total of 9,157 classified loans worth Tk 1.34 billion. PKB offers collateral-free loans to outbound workers and supports income-generating activities for returning migrants but faces suboptimal recovery rates for both migration and rehabilitation loans. A shortage of manpower in branches, borrowers’ priorities, and additional migration costs contribute to these challenges.
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