SoBs miss bad loan recovery targets

Staff Correspondent | Published: 01:06, Feb 24,2020


All the state-owned commercial banks have failed again to achieve major targets, including recovery of bad loans in the first six months of the current fiscal until December, officials said.

Scam-hit Sonali Bank achieved 42 per cent of its recovery target of Tk 421 crore bad loans and the achievement of another scam-hit Janata Bank was 52 per cent of its recovery target of Tk 119 bad loans.

The achievement of Agrani Bank was 33 per cent of its recovery target of Tk 131 crore bad loans, the achievement of Rupali Bank was 34 per cent of its recovery target of 83.88 crore bad loans.

BASIC Bank, which turned sick due to huge shady loans provided by the previous bank’s board led by its former chairman Abdul Hye Bacchu between 2009 and 2014, achieved 87 per cents of its recovery target of Tk 134 crore bad loans until December.

Agrani Bank managing director Mohammad Shams-Ul Islam told New Age on Sunday that the target set for recovering bad loans were ‘ambitious’.

He said that there was improvement in cash recovery by his bank in the first six months of the fiscal over the same period of the previous fiscal.

Still, there was no room for complacency for improving the annual performance indicators further, he said.

Recovery of bad loans, recovery of written-off loans and keeping overall bad loan portfolios within the target were among 45 indicators the state-owned bank committed to achieving under their annual performance agreements with the Financial Institutions Divisions since 2014-15.  

The divisions held the six-month review meeting on February 11.

Financial Institutions Divisions additional secretary ABM Ruhul Azad, who presided over the meeting, said they had asked the banks to improve their performance as recovery of bad loans and written-off loans were not satisfactory.

He noted that bad loans became a huge burden for the banks.

The defaulted loans in the banking sector shot up to Tk 1.16 lakh crore as of September 2019, marking a rise by Tk 93,807 crore in last 12 years.

The divisions officials said that improvement in recovery of bad loans claimed by the bankers happened because of rescheduling defaulted loans at 2 per cent down payments.

The government has offered the facility since May, they said.  

On Saturday at a press briefing, Centre for Policy Dialogue’s distinguished fellow Debapriya Bhattacharya said there was no sign of improvement in recovering bad loans despite offering an easy opportunity.   

The country’s banking sector was heading for a fragile state as it is held hostage by a few individuals and entities, he said while making comment on the government move to constitute a commission for the county’s banking sector.

On February 13, 2019, against a writ petition filed by Human Rights and Peace for Bangladesh, the High Court asked why the government and the central bank would not be directed to form an independent commission.

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