Scams, Defaulted Loans
SCB’s loss-making branches rise to 235
The number of loss-making branches of the four state-owned commercial banks increased by 53 in the first nine months of 2013 due to surge in the defaulted loans at the banks and decreased credit demand from the private sector, Bangladesh Bank officials said.
According to the latest BB data, the number of loss-making branches of the four banks — Sonali, Janata, Agrani and Rupali — stood at 235 as of September 30, 2013 from 182 as of December 31, 2012.
Janata Bank, however, was able to reduce the number of its loss-incurring branches to 81 as of September 30, 2013 from 82 as of December 31, 2012, the BB data showed.
A BB official told New Age on Wednesday that financial scams affected severely the profitability of the banks by increasing defaulted loans at the banks.
The loss-incurring branches had to keep significant amount of provisions against their defaulted loans resulting that their operating profits were turned into net losses, he said.
The BB data showed that the number of loss-making branches of the SCBs but Janata Bank increased between December 31, 2012 and September 30, 2013.
The number of loss-incurring branches of Sonali Bank increased to 56 from 54, that of Agrani Bank to 69 from 34 and that of Rupali Bank to 29 from 12.
The BB official said the central bank repeatedly asked the SCBs in the quarterly meetings with them to reduce the number of their loss-making branches.
‘But, the number increased sharply in recent period as the banks did not take necessary measures in recovering their defaulted loans,’ he said.
The defaulted loans at the banks have recently increased as they disbursed significant amount of loans to clients considering their political affiliation, he said.
Under the circumstances, the BB unearthed a number of financial scams at the four banks in which high officials and board members of the banks were involved, he said.
The number of loss-making branches of the SCBs will not decrease if the internal control system of the banks is not strengthened in the months to come, the official said.
According to the BB data, the defaulted loans at Sonali Bank increased to Tk 12,570.21 crore as of September 30, 2013 from Tk 12,045.60 crore as of December 31, 2012, that of Janata Bank to Tk 4,787.22 crore from Tk 3,836.34 crore, that of Agrani Bank to Tk 5,119.36 crore from Tk 4,663.27 crore and that of Rupali Bank to Tk 1,697.45 crore from Tk 969.69 crore.
Another BB official said that a decreased loan disbursement by banks to the private sector was another reason for the upward trend in the number of loss-making branches of the four banks.
The ADR in the SCBs dropped to 57.39 per cent as of November 28, 2013 from 68.95 per cent as of December 31, 2012.
As per the BB rules, the conventional commercial banks are not allowed to invest more than 85 per cent of their deposits while Islamic banks and Islamic wings
of the conventional commercial banks can invest up to 90 per cent of their deposits.
The official said the loan disbursement by banks including the SCBs plunged in the last few months as the businesspeople were now unwilling to expand their enterprises by taking credit from banks.
Due to the lowered loan disbursement, the surplus liquidity in the SCBs increased to Tk 34,395.34 crore as of November 28, 2013 from Tk 16,542.91 crore as of March 7, 2013.
Loan disbursement is a key component for any bank to earn profit, but the surplus liquidity amid dull business has reduced the SCBs’ profitability, the official added.
-With New Age input
