Falling Investment
Banks’ ADR drops below 74pc
The credit or advance-deposit ratio in the banking sector declined below 74 per cent in August as credit demand in the private sector continued to drop in the current fiscal year 2012-13 due to dull business situation in the country amid political unrest.
Eight banks and 10 Islamic wings of the conventional banks posted negative credit growth as of August 1, 2013 on year-on-year basis.
According to the latest BB data, the overall ADR in the banking sector dropped to 73.34 per cent as of August 1, 2013 from 76.59 per cent as of December 31, 2012.
The ADR was 80.33 per cent as of June 7, 2012.
As per 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.
A number of banks crossed the ADR limit in 2011 and in the first half of 2012, violating the BB rules but now the situation has changed totally as the credit demand from the private sector continued to decrease due to the ongoing political unrest, a BB official told New Age on Thursday.
He said that the banks had also taken a cautious policy in sanctioning fresh loan as the banking industry recently faced a number of scams.
The ADR in the banking sector along with its credit growth will decline further in the coming months if the ongoing political instability continues, he said.
The BB data showed that the ADR in 26 banks went down significantly between December 31, 2012 and August 1, 2013.
The 26 banks whose ADR ratio declined in August are Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Pubali Bank, Uttara Bank, Islami Bank Bangladesh, IFIC Bank, Eastern Bank, Prime Bank, Southeast Bank, Dhaka Bank, Al-Arafah Islami Bank, Social Islami Bank, Bangladesh Commerce Bank, First Security Islami Bank, Premier Bank, Bank Asia, Standard Chartered Bank, State Bank of India, Commercial Bank of Ceylon, National Bank of Pakistan, Citibank NA, HSBC, BASIC Bank and Bangladesh Development Bank.
The ADR ratio in the state-owned commercial banks dropped to 61.72 per cent as of August 1, 2013 from 68.95 per cent as of December 31, 2012, that of the local private commercial banks to 78.06 per cent from 79.65 per cent and that of the Islamic banks and Islamic wings of the traditional bank to 83.10 per cent from 86.89 per cent.
Businesspeople adopted a ‘wait and see’ approach in the last few months due to the ongoing political unrest in the country, another BB official said.
‘So, the credit growth in the private sector dropped to 11.04 per cent in the FY13 on year-on-year basis, the lowest growth in the last 13 fiscal years.’
The official said the majority of the banks might fall further into a loss situation in this year like the previous year, if they see dull ADR also in the remaining months of this year.
The eight banks and 10 Islamic wings of the conventional banks which posted a negative credit growth as of August 1 on year-on-year basis are Sonali Bank (-5.64 per cent), Janata Bank (-1.02 per cent), ICB Islamic Bank (-27.48 per cent), Shahjalal Islami Bank (-21.50 per cent), State Bank of India (-31.11 per cent), Citibank NA (-9.52 per cent), HSBC (-5.39 per cent), Bank Alfalah (-8.21 per cent), Islamic wing of AB Bank (-8.65 per cent), Islamic wing of The City Bank (-44.45 per cent), Islamic wing of Prime Bank (-4.85 per cent), Islamic wing of Dhaka Bank (-18.29 per cent), Islamic wing of Standard Bank (-15.78 per cent), Islamic wing of Premier Bank (-14.20 per cent), Islamic wing of Bank Asia (-2.21 per cent), Islamic wing of Jamuna Bank (-16.10 per cent), Islamic wing of HSBC (-52.64 per cent) and Islamic wing of Bank Alfalah (-11.18 per cent).
-With New Age input
