20 defaulters account for state banks’ one-third bad loans

The top 20 defaulters accounted for one-third of the total bankruptcy loans of state banks in the first half of 2017, according to the Ministry of Finance .

In June, the defaulters had Tk 11,579 crore at Sonali, Janata, Agrani, Rupali, BASIC and Bangladesh Development Bank (BDBL), amounting to 33.48 percent of the default borrowings of the lenders , According to a document prepared by the Ministry of Finance.

The paper was presented in a workshop entitled "Review of the Health of State Banks: Facing Challenges," organized yesterday by the Finance Division at the Cirdap Auditorium in Dhaka.

52.5% of BDBL's defaults were held by the top 20 defaulters, followed by 51.3% for Rupali and 49% for Janata, the document said.

The rise in default loans puts pressure on the capital of state banks, forcing the government to inject funds for their survival, said Ms Eunusur Rahman, senior secretary of the banking and financial institution division, Who presented the document.

Over the past four years, the government has injected Tk 9,639 crore into state banks. This fiscal year, Tk 2,000 crore has been set aside for this purpose.

The ratio of capital adequacy of state commercial banks was 6.99%, which is well below the 10% regulatory requirement.

Finance Minister AMA Muhith accused the bankers of increasing default loans: they do not release funds to clients on schedule, resulting in project failures.

"The bankers do it consciously, so that default customers on their loans and are under their control," added the minister.

SK On Chowdhury, deputy governor of the Bank of Bangladesh, acknowledged that there is a problem in disbursement of loans, that is why new loans are in default.

"But the performance of state banks is not as bad as it usually is. Banks are making profit, but the need for higher provisioning against their bad ones Ready reminds them. "

Chowdhury said that banks should follow the BB credit bureau 's report before lending to clients to avoid a loan being failing.

The default loans of the six state banks amounted to 34581 Tk TK, or 27% of their loans.

In June, the average default rate in the banking sector was 10.13%.

Banks should follow the practice of ethical loans to reduce the default loan rate, said Fazle Kabir, governor of the BB.

He also asked the banks to put more effort to recover the write-off credits.

The warranty requirement is a major constraint to the success of a commercial project, said Md Ataur Rahman Prodhan, general manager of Rupali Bank.

He stated that if customers want to borrow at Tk 100 crore for a project, they must provide valid warranties for Tk 150 crore. "The project begins to fail from this point," he added.

Zaid Bakht, president of Agrani Bank, said the financial performance of state banks is becoming poorer as they participate in government development activities.

As part of the government 's social security program, banks channel money across the country without service fees, costing them Tk 100 crore, he said.

Members of the board of directors of state banks do not have shares in lenders, so they do not feel owners, said Hedayetullah Al Mamoon, Senior Secretary of the Finance Division.

Subsequently, banks should float stocks on the stock market to bring shareholders to the board, he added.

Mr. Mannan, Minister of State for Finance, asked banks to cut costs to profit. "Banks should be able to call if they open or close a branch."

Commercial banks, private and public, have 9,720 branches nationwide, 53% of which belong to state banks, according to the document of the Finance Division.

The number of account holders stood at 8.14 crores in December 2016, of which 54 percent with eight state banks.

The eight banks also account for 31% of the total deposits of Tk 952,000 crore in the banking sector in June.

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