SCBs go for short-term lending as large loan release stalled

The four state-owned commercial banks have started lending heavily on the call money market as their loan disbursement to the private sector has slowed down significantly in the last few months, said officials of the Bangladesh Bank.
According to the latest BB data, the SCBs — Sonali, Janata, Agrani and Rupali — collectively invested on the call money market Tk 1,658 crore on Tuesday, Tk 2,073 crore on Monday and Tk 2,618 crore on Sunday.
Call money market is an inter-bank trading system from where the banks and NBFIs borrow or lend money for a short term.
A BB official told New Age that the four state-run banks had hugely borrowed from the call money market in 2011 and 2012 due to severe liquidity crisis.
‘But, the four banks but Sonali started lending on the call money market during the last few months as they have almost stopped loan disbursement to the private sector,’ he said.
Sonali Bank started lending on the call money market on May 12.
The BB data showed that the four banks lent a significant amount of money on the call money market in almost every working day this month.
On Tuesday, Sonali Bank lent Tk 260 crore, Janata Bank Tk 518 crore, Agrani Bank Tk 30 crore and Rupali Bank Tk 850 crore.
Among all the commercial banks and NBFIs, Sonali Bank and Rupali Bank topped the list of borrowers from the call money market in 2012 and the same scenario also existed in 2011.
Besides, the call money market is now passing a stable period with a lower interest rate between 7 per cent and 8 per cent, as the banks are now enjoying sufficient liquidity amid a lower loan disbursement to the industrial sector due to a poor business environment, the official said.
Sonali Bank managing director Pradip Kumar Dutta told New Age on Wednesday that his bank’s fund position was now better than last year resulting that the bank had entered on the call money market for lending.
‘We borrowed significantly in almost every working day in 2012 to ensure cash reserve ratio with the central bank but the situation has changed much this year’, he said.
Sonali Bank took a cautious policy to sanction loan in the last year due to the Hallmark Group scam, he said.
‘My bank has started to disburse loan in the private sector again as it is now enjoying sufficient liquidity,’ he said.
The advance-deposit ratio of the four state-owned banks has been maintaining a declining trend for the last six months, another BB official said.
The four banks have now adopted a cautious policy to sanction loan, as the central bank has recently unearthed a number of scams in the banks, he said.
The BB data showed that the ADR ratio of Sonali Bank declined to 65.87 per cent on April 25, 2013 from 66.03 per cent on November 29, 2012, that of Janata Bank to 71.70 per cent from 77.45 per cent, that of Agrani Bank to 71.34 per cent from 75.78 per cent and that of Rupali Bank to 62.91 per cent from 63.18 per cent.
The poor business environment persisting in the country in the last few months has also discouraged the businesspeople to take loan from the banking source to expand their investment, the official said.

-With New Age input

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