Asks them not to reschedule defaulted loans violating rules
Bangladesh Bank on Thursday expressed its dissatisfaction over the performances of four state-owned commercial banks as the indicators related to their required capital, credit recovery from top 20 defaulters, overall defaulted loans and loss-making branches deteriorated significantly in recent times.
The central bank asked the four banks — Sonali, Janata, Agrani and Rupali — not to reschedule their defaulted loans dodging rules and regulations as they have recently rescheduled significant amount of non-performing loans to avoid provisioning without following a BB circular.
The BB also asked the banks not to disburse large loans as such type of credit usually creates risky situation, a BB official told New Age on Thursday.
The BB asked the banks to give more attention to disbursing SME loans, he said.
The BB expressed its disappointment over the banks’ health and made the suggestion at a regular meeting of signing memorandum of understanding between the central bank and the state-owned banks at the BB headquarters in the capital.
BB governor Fazle Kabir attended the meeting while the managing directors of the banks were present.
The BB arranges the MoU meeting in every three months to supervise and monitor the banks’ financial health.
According to the latest BB data, the capital shortfall of Sonali Bank stood at Tk 2,606 crore as on June 30, 2016, that of Janata Bank at Tk 664 crore, that of Agrani Bank Tk 200 crore and that of Rupali Bank at Tk 374 crore.
The BB asked the banks to take initiative to make up the capital shortfall by recovering non-performing loans.
The BB asked the banks to strengthen their programmes for cash recovery from the top 20 defaulters as they recovered only 18.40 per cent of the loan amount till June 30, 2016 against their annual recovery target of Tk 1,150 crore.
The BB data showed that Sonali Bank recovered only Tk 5 crore in the first six months of 2016 against the annual target of Tk 440 crore, Janata Bank Tk 129 crore against Tk 270 crore, Agrani Bank Tk 1.69 crore against Tk 290 crore and Rupali Bank Tk 76 crore against Tk 150 crore.
The four state-owned banks frequently failed to achieve the cash recovery target from the top 20 defaulters due to lack of initiatives.
The BB also asked the banks to reduce the number of loss-making branches as such type of branches of the SCBs increased significantly as of June 30, 2016.
The BB data showed that the number of loss-making branches of Sonali Bank stood at 290 as on June 30, 2016 from 124 as on December 31, 2015, that of Janata Bank 74 from 15, that of Agrani Bank 99 from 34 and that of Rupali Bank 126 from 10.
The BB official said that the banks had to count huge amount of operating losses due to the rise in the number of their loss-making branches.
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