Bangladesh Bank on Thursday came down heavily on the four state-owned commercial banks for violating the bank company act on the limit they can lend to a single borrower.
The four SCBs – Sonali, Janata, Agrani and Rupali – also reportedly disbursed fresh loans to defaulters without assessing their credit records. According to BB data, the defaulted loan in the SCBs has increased to Tk 19,719.21 crore as of June 30, 2014, from Tk 16,0606.25 crore on December 31, 2013.
The central bank also took the SCBs to task as they failed to recover money from the top 20 defaulters, a BB official said.
The SCBs had recovered only Tk 212 crore, or 34.02 per cent, from their top 20 loan defaulters in the first six months of 2014, against an annual target of Tk 623 crore.
According to bank company act 1991, the outstanding amount of loan to a single person, counterparty or a group will not exceed 35 per cent of the capital of a bank at any point of time.
The SCBs have reportedly already disbursed loans to single borrowers at 40 to 45 per cent of the size of their capital.
The central bank asked the banks to take immediate steps to speed up their recovery of defaulted loans, as their classified loans – loans that are in danger of being defaulted – have recently increased sharply.
The direction came from a Memorandum of Understanding meeting between the SCBs and the BB at the central bank headquarters in the capital. The central bank arranges such meetings with the SCBs every three months.
BB governor Atiur Rahman presided over the meeting where managing directors and chief executive officers of the four banks attended.
A BB official told New Age on Thursday that the central bank asked the SCBs to decrease their single borrower exposure limit in the shortest possible time. BB is also worried that the financial health of the SCBs will decline drastically if for some reason their borrowers face financial troubles.
Non-performing loans badly affect the working capital, the central bank governor reminded the top bosses of the banks.
The BB, instead, asked the banks to give syndicate loan – where three to four banks jointly finance a borrower or project – to diminish risks.
On the issue of disbursing fresh loans to defaulters, the central bank warned of punitive action against the banks if they further disbursed loans to defaulters, said the BB official.
The BB also asked Sonali Bank and Rupali Bank to meet their capital shortfall immediately. Sonali Bank is short by Tk 1,511.31 crore, while the capital shortfall of Rupali Bank stood at Tk 216.76 crore as of June 30, 2014.
The BB further asked the four banks to introduce automation system at all their branches as they are lagging behind private and foreign banks in introducing online banking for customers. A mere 858 branches or 24 percent of a total of 3,540 branches of the SCBs offered online coverage as of June 30, 2014.
The central bank earlier set a deadline for the SCBs to introduce automation at all their branches by 2016, the official said.
-With New Age input
