The state-run Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) have failed to meet any of the conditions set at MoU for the year 2014 by the Bangladesh Bank to recover their financial crises.
This was revealed at a meeting the central bank held over MoU review report of 2014 with managing directors of two specialised banks yesterday at the central bank headquarters.
According to the review report, non-performing loans of BKB has gradually increased to 33% till the end of December last year against the target of reducing the default loan rate to 20% by June 2015.
The default loan rate of RAKUB rose to 32.39% on December against the same target set at MoU. Of the total classified loans, BKB has bad loan of 66% and RAKUB 68% till the end of last year.
The Capital Adequacy Ratio (CAR) of BKB and RAKUB was negative 38.86% and 5.16% respectively in December despite obligation of maintaining CAR at 10%.
The capital shortfall of BKB stood at Tk6,195 crore and RAKUB at Tk598.72 crore at the end of December.
The cash recovery against the default loans of BKB was Tk361 crore last year which was only 26.37% of the target of Tk1,370 crore as per the MoU review report.
The RAKUB recovered default loans of Tk167 crore which was 42.68%, slightly more than BKB, of the target of Tk392 crore.
The loan recovery from top 20 defaulters by two banks were also very poor. BKB recovered loans from top defaulters of around Tk16 crore and RAKUB Tk58 lakh against the target of Tk70 crore and Tk40 crore respectively set for June 2015.
Moreover, the two banks provided loans to the single party, violating the single borrower exposure limit.
BKB provided loans of Tk227 crore to 12 clients beyond the limit of 15% of bank’s paid-up capital while RAKUB Tk5.25 crore to three groups, exceeding the limit.
BKB Managing Director MA Yousoof and RAKUB’s Manjur Ahmed admitted their failure to go with the Bangladesh Bank’s prescription at the meeting.
Finance Minister AMA Muhith expressed dissatisfaction over the performance of Krishi banks at an interview reported in a most circulated newspaper of the country.
Bangladesh Bank set a series of conditions at MoU every year as a routine duty and the banks continuously failed to meet ultimatums, said a senior executive of central bank.
The banks mainly do not care about the MoU as the central bank does not react strongly against the banks callousness, he said.
