State-owned commercial banks have failed to check bad loans as per their agreements with the government due to the current loan rescheduling opportunity by paying only two per cent down payment, officials said on Tuesday.
In July –September quarter, scam-hit Janata Bank’s target of limiting its bad loan amount was exceeded by a whopping Tk 9,924 crore while the target of scam-hit Sonali Bank by Tk 1,000 crore.
Sonali’s managing director Ataur Rahman Prodhan said that the difference of Tk 1,000 crore was quite surprising.
He, while talking to New Age, said that the difference should have been maximum Tk 400 crore, adding, ‘Still, I have to check out the matter.’
Sonali, which could not recover any part of the money embezzled by the Hallmark Group in 2013, signed annual performance agreements with the government like other banks to achieve targets on defaulted loan as well as disbursement and realisation of loans.
As per its agreement, Sonali was supposed to keep its total outstanding bad loan at Tk 11,800 in the first quarter of the current financial year.
But the Financial Institutions Division at a review meeting at the Secretariat on the day found that Sonali’s outstanding loan stood at Tk 12,800 crore.
Presided over by FID additional secretary ABM Ruhul Azad, the meeting also found that Janata’s outstanding bad loan stood at Tk 19,924 crore against the target of Tk 10,000 crore.
Officials who attended the meeting said that the drive for recovering bad loans was almost stalled.
They said that the errant borrowers including those of Janata’s clients Crescent Group with Tk 5,520 crore and AnonTex with 3,572.98 crore bad loans were trying to avail the restructuring bad loan opportunity announced by the Bangladesh Bank in May this year.
They said that the BASIC Bank, facing almost bankruptcy due to fictitious loans extended by its previous board of directors, led by former chairman Sheikh Abdul Hye Bacchu, too, failed to achieve its target by Tk 493 crore.
Experts have been opposing the current loan restructuring policy saying that it would artificially reduce the bad loan amount for the time being.
Former caretaker government adviser AB Mirza Azizul Islam at the fourth conference of the Bangladesh Economists Forum on Saturday criticised the poor governance in the banking sector.
‘You give loans to your friends and relatives and don’t bother to recover those,’ he said.
Allowing four members of a family to be directors of a bank is not conducive to good governance in the sector, he added.
Officials disclosed that Agrani’s defaulted loan stood at Tk 6,000 against its target of Tk 5,600 while Rupali’s figure was Tk 4,305 crore against its target of Tk 3,700 crore.
Officials said that the FID had asked the banks to be proactive to achieve the targets in the remaining period of the fiscal year ending in June 2020.