Six state-owned banks have been able to recover less than 25% of annual target of classified loans over the last seven months from January under performance contracts.
Bank and Financial Institutions Division placed the banks’ unsatisfactory loan recovery situation at a meeting recently, presided over by Bank Division Secretary M Aslam Alam. The banks include Sonali, Janata, Agrani, Rupali, BDBL and BASIC.
The targets have been set for the calender year 2015 as per performance contracts signed between the banks and Bank Division in April this year.
According to a working paper, Sonali Bank recovered 24.22% of Tk1,500 crore target, Janata 27.29% of Tk750 crore, Agrani 21.92% of Tk900 crore, Rupali 12.90% of Tk240 crore, BDBL 11.62% of Tk90 crore and BASIC 23.03% of Tk800 crore.
M Aslam Alam attributed the slow pace in loan recovery to the “structural problems,” but hoped the situation would gradually improve.
“The slow pace of loan recovery was due to structural problems. However, the situation will gradually improve,” he told Dhaka Tribune, adding that the banks’ financial condition will better if funds are injected by the government.
M Aslam Alam saw a lack of interest among state banks to disburse agriculture and SME credit. During the seven-month period, Sonali Bank disbursed only 1.86% of agriculture loan target (annual), Janata 2.57%, Agrani 5.02%, Rupali 6.25%, BDBL 5.16% and BASIC 2%.
Between January and July, Sonali Bank recovered 5.95% of agricultural loan target, Janata 2.90%, Agrani 6.07%, Rupali 16.25%, BDBL 12% and BASIC 13.54%.
SME loan recovery rates were Sonali 37.55%, Janata 34.23%, Agrani 97.01%, Rupali 63.85%, BDBL 56.47% and BASIC 41.49%.
The finance division provided Tk11,219 crore to four state banks over the last 12 years to meet their capital deficits but the lenders’ financial position is yet to improve, said an official of the division asking not to be named.
Sources said an amount of Tk5,000 crore has been earmarked in the budget this fiscal year against the capital shortfalls of four state-owned commercial banks.
The banks have accrued a cumulative loss of Tk10,112 crore over the past seven years, for which poor management within the banks has been blamed.