Loan recovery far away from target
Major financial indicators of the state-owned Rupali Bank declined in the first quarter of this year as it failed to recover the defaulted loan against the BB target and number of its loss-making branches also increased.
The BB earlier asked Rupali Bank to recover defaulted loan of at least Tk 240 crore in 2013 but its achievement in the first three months of the year is far away from the target.
According to the BB report, the bank recovered defaulted loan only Tk 9.10 crore in January–March.
Under the circumstances, the BB asked the bank to take necessary measures in recovering the defaulted loan so that the bank (Rupali Bank) would be able to fulfil the central bank target.
The BB gave the instructions on Wednesday during a meeting with Rupali Bank with central bank deputy governor Abu Hena Mohd Razee Hassan in the chair.
The meeting reviewed the data till March 31, 2013 of the state-owned bank as per the memorandum of understanding signed between the BB and four state-owned commercial banks.
A BB official, who attended the meeting, told New Age that Rupali Bank had also failed to recover the defaulted loan from its top 20 defaulters in accordance with the central bank direction.
The BB set a recovery target of Tk 48 crore from the top 20 defaulters in 2013 whereas the bank could collect only Tk 35 lakh in the first quarter.
A huge amount of money of Rupali Bank is now stuck because of cases pending with the Artho Rin Adalat, a court dealing with credit disputes, which has made a liquidity crisis in the bank, the official said.
The stuck money of Rupali Bank stood at Tk 1,201 crore with the Artho Rin Adalat in which 3,014 cases are now pending.
The BB asked the bank to take measures to recover the stuck money from the court, the official said.
The BB earlier asked the bank to decrease the number of loss-making branches within this year, but such type of branches increased to 32 as of March 31 from 12 as of December 31, 2102.
The number of loss-making branches increased in the bank as the defaulted loan increased in the branches, he said.
The BB data showed that the overall defaulted loan in the bank had stood at Tk 2,467.38 crore as of March 31, 2013 from Tk 969.69 crore as of December 31, 2012 and the provision shortfall of the bank also increased to Tk 804.11 crore from Tk 125.94 crore.
For this reasons, the capital shortfall against the risk-weighted asset of the bank stood at Tk 1,165 crore as of March 31, 2013.
The bank has been advised to apply to the government to take equity so that it could be able to overcome from its ongoing financial crisis, the BB official said.
Another BB official said that the central bank had recently cut down the credit growth target for Rupali Bank to 10 per cent from 15 per cent.
But, the bank failed in containing the credit growth set by the BB as its credit growth stood at 6.62 per cent in the first half of 2013, he said.
The credit growth should have been the highest 5 per cent as of June this year.
The BB asked the bank to contain the credit growth within highest 10 per cent in 2013.
The official said the credit growth target of the bank had been declined in a bid to control its defaulted loan.
Rupali Bank sanctioned a large amount of money in the last few years flouting the banking rules and regulations which played a major role in increasing the defaulted loan, he said.
BB executive director Mohammad Naushad Ali Chowdhury and Rupali Bank managing director and chief executive officer M Farid Uddin and other senior officials of the two institutions attended the meeting.
The BB will also hold a meeting with Agrani Bank today. The central bank, under the memorandum of understandings, signed with the SCBs, holds meetings with their managements in every three months.
-With New Age input
