However, the banks failed to recover the loans that had to be written off through lawsuits or other measures, banking sources said.

Of the total, the nationalised banks have written off the main chunk and the private banks a very small part.

Banking sources said the write off was done in compliance with a Bangladesh Bank (BB) regulation. "Loan default is a chronic problem. Writing off is not waving loans. This is an internationally practiced banking measure for clearing the balance sheets. It has been done so that banking in Bangladesh could gain more international confidence," explained a central bank official.

On recovery of the bad loans, a Sonali Bank official said some of the banks had deployed private loan recovery agencies to speed up the process. "This has helped Sonali Bank to recover Tk 15 lakh till now," he said. A high official of Pubali Bank added that the same measure had helped his bank recover Tk 10 lakh.

According to banking sources, the four nationalised commercial banks together have written off Tk 1984 crore. This brought the level of their default loans down by 2.73 percent to 31 percent or Tk 11,053 crore.

Sonali Bank has written off Tk 880 crore, Janata Bank Tk 569 crore, Agrani Bank Tk 368 crore and Rupali Bank Tk 165 crore.

The five specialised banks of the country have written off a total of Tk 779 crore bad loans, reducing their default loans' share by 8 percent to 48 percent or Tk 4,790 crore.

Of them, Bangladesh Shilpa Bank has written off Tk 409 crore, Bangladesh Shilpa Rin Shangshtha Tk 349 crore and Basic Bank Tk 5 crore. Compared to them, Krishi Bank has made a meagre write off -- Tk 15 crore, out of its Tk 2,583 crore bad loans. Rajshahi Krishi Unnayan Bank has made no write off at all, although it has bad loans amounting to Tk 746 crore.

The private banks, which have a total bad loan of Tk 5,280 crore, have written off Tk 1,079 crore, while the foreign banks that have Tk 125 crore of bad loans have written off Tk 31 crore.

The chief executive of a private bank said "our (private banks') pace of writing off is slow because this demands all-out scrutiny. But we hope to write off a major chunk of our default loans within this month."