The Bangladesh Bank on Monday expressed its dissatisfaction with the increasing trend in defaulted loans in state-owned Janata Bank and asked it to intensify measures
for recovering the non-performing loans.
Janata Bank was also been advised to keep the required provision against the classified loans as the provision shortfall in the bank increased significantly last year.
The BB gave the instructions during a meeting with Janata Bank with the central bank deputy governor, Abu Hena Mohd Razee Hassan, in the chair.
The meeting reviewed the data till December 31, 2012 of the state-owned bank as per the memorandum of understanding signed between the BB and four state-owned commercial banks.
A senior BB official told New Age on Monday that Janata Bank had failed to fulfil the target set by the central bank in recovering defaulted loans.
The BB asked the bank to realise the classified loan amounting to Tk 76 crore from the top 20 defaulters in the year, he said.
‘But, the bank recovered Tk 47.50 crore from the top defaulters in the period,’ he said.
Besides, the bank recovered the classified loan amounting to Tk 198.54 crore from other defaulters in 2012 although the BB set a recovery target of Tk 219 crore for the period, he said.
On the other hand, the classified loans in the bank increased significantly last year.
According to the BB data, the defaulted loans in Janata Bank increased to Tk 3,836.34 crore as of December 31, 2012 from Tk 1.093.62 crore as of December 31, 2011.
Moreover, the provision shortfall in the bank alarmingly increased in 2012.
The central bank recently unearthed unreported defaulted loan amounting to Tk 424.64 crore in 12 branches of the bank in which the provision shortfall stood Tk 373.13 crore, he said.
The BB asked Janata Bank to keep the required provision against the defaulted loans, he said.
Janata Bank also failed to maintain 10 per cent required capital against its risks weight assets in 2012. The capital of the bank stood 7.44 per cent against its risks weight assets.
The situation indicates a significant weakness in the bank’s financial
condition, the BB official said.
The BB asked the bank to ensure the required capital without further delay, he said.
He said that the number of the loss-making branches of the bank had also increased last year as such type of branches increased to 82 from 76 in 2011. The total branch of the bank is 883.
The BB asked the bank to take measures to stop the increasing trend in loss-making branches, he said.
Another BB official said that the central bank had instructed the bank to boost up the automation process in the branch level.
The BB statement showed that only 25 branches of the bank had so far been automated.
BB executive director Mohammad Naushad Ali Chowdhury and Janata Bank managing director and chief executive officer SM Aminur Rahman and other senior officials of the two institutions attended the meeting.
Earlier on Sunday, the BB held a meeting with the management of Sonali Bank and asked it to take some immediate steps to improve its classified loan position and streamline its loan allocation.
The BB will also hold meetings with Agrani Bank on April 24 and Rupali Bank on April 25.
The central bank, under the memorandum of understandings signed with the SCBs, holds meetings with their managements in every three months
to review their operations and give necessary instructions to ensure discipline and transparency in the banks.
newagebd
-With New Age input
