The government is now concerned over the worst performance of private and foreign banks in connection with widespread irregularities involving more than Tk6,000 crore especially for default loans, official sources said.
Preferring anonymity, an official of Bank and Financial Intuitions Division said the financial conditions deteriorated, raising the capital shortfall in the private banks, especially National Bank Ltd and National Bank of Pakistan.
“We will ask the central bank to provide information about the private and foreign banks to give policy support and ensure accountability in dealing with public money,” he said.
In march, the foreign banks’ average Capital Adequacy Ratio (CAR) was 20% but National Bank of Pakistan had a capital deficit of Tk331 crore.
Sources in banking sector said National Bank of Pakistan had already managed $1 million to cover up its capital shortfall.
Before the Eid vacation, Bangladesh Bank appointed its General Manger Kazi Sayedur Rahman as an observer to National Bank Ltd, a private commercial bank, against a backdrop of financial irregularities and fall in key financial indicators such as capital adequacy and classified loans.
Banking Division Secretary M Aslam Alam said, “We will seek information on financial irregularities in local private commercial banks and foreign banks to give them policy support.”
The National Bank of Pakistan in Bangladesh is facing financial crisis, he said, adding that Bangladesh Bank looks into the position of state-owned banks regularly, but they do not properly look into financial status of private banks.
“We have observed state banks’ situation at every board meeting. At the last board meeting, we have asked the bank authority to inform us about financial conditions of all private and foreign banks.”
A staggering 40% of big loans of National Bank Ltd is stuck with three major business groups-- S Alam, Maisha and Beximco.
Of them, S Alam has a loan of Tk1,193 crore with NBL, which is more than the amount that a single entity is allowed to borrow from a commercial bank.
Maisha Group and Beximco Group, whose owners are said to be close with the ruling party, have Tk1,125.55 crore and Tk468 crore loans with NBL respectively.
Even S Alam Group and Maisha Group have not been paying interest for around two years on various “unacceptable” grounds, affecting the profitability of the commercial bank seriously.
