The government has signed performance contracts with 14 state-owned banks and financial institutions to ensure accountability and transparency in the country’s financial sector.
Banking Division Secretary M Aslam Alam signed the performance contracts with chairmen, CEOs and managing directors of the banks and financial institutions.
The deals will remain effective till the end of fiscal year 2015-16.
Under the contracts, the performance of the chairmen, CEOs and managing directors will be under evaluation on the basis of total loans, classified loans, earnings from classified loans and capital adequacy ratio (Basel II).
Bank and Financial Institutions Division made the move to sign performance contract to avoid big financial mishap like Hall-Mark loan scam, said officials.
The banks include Sonali, Janata, Agrani, Rupali, BASIC, Bangladesh Development Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Krishi Bank, Probashi Kallyan Bank, Ansar and VDP Development Bank, Bangladesh House Building Finance Corporation, Karmasangsthan Bank, Sadharan Bima Corporation and Jiban Bima Corporation.
Finance Minister AMA Muhith hopes the move will make some improvements in the balance sheets of the banks and financial institutions.
He said finance ministry had set up some performance criteria for the chairmen and managing directors bringing few reforms in the sector.
The performance contracts will not clash with MoU signed between Bangladesh Bank and financial institutions, said M Aslam Alam.
Sonali Bank
The performance of Sonali Bank has deteriorated mostly in terms of capital and provision.
The bank also faced a provision shortfall of Tk1,086 crore in September this year, which was zero in December last year.
It was due to hike in provision requirement along with the rising non-performing loans (NPL). The default loan rate of the bank rose to 37.65% in September from 34.53% in December.
Total loans of Sonali Bank were Tk28,934 crore at the end of 2014. The figures are estimated to be Tk30,500 crore at end of 2015 and Tk33,500 crore at the end of 2016.
The bank’s classified loan was Tk8,644 crore in 2014. It is estimated to be Tk6,600 crore in 2015 and Tk5,300 crore in 2016.
Earnings from classified loan were Tk739 crore in 2014. It is estimated to be Tk1500 crore in 2015 and Tk1330 crore in 2016.
CAR was 12.24% in 2014. The estimates suggest the ratio would be 10% in 2015 and 10.60% in 2016.
Profit was Tk605 crore in 2014. The figure is estimated to be Tk500 crore in 2015 and Tk850 crore in 2016.
BASIC Bank
The trouble-hit BASIC Bank incurred the highest ever loss of Tk2,686 crore in 2014 because of spillover effects of loan scams of the previous years.
The default loans of the bank rose to 53.32% or Tk6,310 crore at the end of 2014.
The bank’s total loans were Tk11,834 crore in 2014. It is estimated to be Tk13,500 crore in 2015 and Tk15,500 crore in 2016.
Classified loans were Tk6,310 crore in 2014. The figures are estimated to be Tk4,500 crore in 2015 and Tk3,500 crore in 2016.
Agrani Bank
The bank’s earnings from classified loans amounted to Tk502 crore in 2014 while it was estimated to be Tk900 crore in 2015 and Tk900 crore in 2016.
CAR was 10.10% in 2014. It may be 11% in 2015 and 11.50% in 2016.
Janata Bank
Earnings from classified loans amounted to Tk734 crore in 2014 and it may be Tk750 crore in 2015 and Tk600 crore in 2016.
CAR was 10.30% in 2014 while it may be 10.50% in 2015 and 11% in 2016.
Rupali Bank
Earnings from classified loans were Tk125 crore in 2014. It may be Tk280 crore in 2015 and Tk230 crore in 2016.
CAR was 11.40% in 2014 and it may be 10.50% in 2015 and 11% in 2016.
