Sonali Bank has been suffering stagnation of business over the past three years as the bank officers shy away from credit disbursement, fearing further credit scam like Hallmark.
The bank officials are shying away from disbursing loans since the Hallmark loan scam, resulting in stagnation in the bank’s business, said Pradip Kumar Dutta, managing director of the bank.
Moreover, he added, overall banking business is going through a sluggish mood due to lack of demand.
The credit growth of the bank continued to dim since 2013. The bank witnessed negative growth every quarter, widening the gap between the credit growth achievement and its ceiling set at MoU.
The bank posted negative credit growth of 0.94% in July-September quarter last year compared to the same negative growth of 4.13% in October-December quarter of previous year.
The adjusted loan growth of Sonali Bank stood at negative 4.92% in first quarter last year against the credit ceiling of 6% set for 2015 in MoU.
As the banks have to disburse a certain amount of loans to the government and agriculture sector every year, the ceiling of bank credit is determined on the basis of adjusted loans so that the banks can disburse loans to other sectors. The bank’s MD said the financial indicators of the bank are being deteriorated for poor business performance.
“We took strict measure to expand credit, setting the certain target for respective officers,” he said.
The total outstanding loan of Sonali Bank came down to Tk28,660 crore in September last year from Tk30,051 crore in December 2013, according to the Bangladesh Bank data.
The amount of adjusted loans also declined as the bank refrained from lending to large clients. The total adjusted loans stood at Tk19,633 crore in September 2015, down from Tk22,133 crore in December 2013.
The bank focused on SME and agriculture lending instead of lending large loan due to lack of good borrowers, said the top manager of Sonali Bank.
The advance deposit ratio of Sonali Bank was the lowest 43% among the state-run banks as of September last year.
Though the lending rate of most of the banks was in downward trend last year, Sonali Bank experienced a different scenario with rising lending rate to 8.68% in November last year from 8.54% at the beginning of the same year.
The Sonali Bank managing direction said his bank is awash with liquidity, but failed to lend due to lack of credit demand.
The total deposit of the bank stood at Tk75,834 crore as of September last year. Of the deposit, Tk28,660 crore has been lent in the market.