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Dhaka Tribune

ADR Ratio: 10 banks overshoot BB lending instructions

The BB has cautioned the banks and asked them to lower their lending in line with the ADR instructions

Update : 27 Jan 2020, 09:57 PM

Ten banks, both private commercial and state-run, lent aggressively in November last year bypassing the Bangladesh Bank (BB) criteria, exposing them to risk in the already battered banking sector.

While most of the scheduled banks remained cautious in lending and collecting fresh deposit ahead of a dictated deposit-lending regime beginning April, the roles of the banks concerned for excessive lending have irked the central bank.

The BB has cautioned the banks and asked them to lower their lending in line with the ADR instructions.

The banks in questions are Basic Bank, AB Bank, National Bank, NRB Bank, NRB Global, Agrani Bank, Padma Bank, Premier Bank, Union Bank and Rajshahi Krishi Unnayan Bank, according to the latest central bank data. 

A few of the 10 banks even exceeded and lent more than their deposits, said a high official of the central bank. 

In November, Basic Bank’s deposit was Tk13,649.05 crore while the bank lent Tk15,216.10 crore. The state-run bank’s ADR (advance to deposit ratio) stood at 111.28%. 

State-run Agrani Bank’s (Islamic window) deposit was Tk121.56crore while its credit was Tk187.84crore. The bank’s ADR stood at 154.52%. 

Premier Bank’s (Islamic window) deposit was Tk781.05crore and the credit was Tk1,275.06crore. The bank’s ADR stood at 97.25%.


Padma Bank's deposit was Tk4,156.85 crore against its lending of Tk5,488.48crore, with the ADR at 115.37%. 

Speaking to Dhaka Tribune, Md Ehsan Khasru, Managing Director of Padma Bank (previously known as Farmers bank), said: “Previously our ADR was even higher, but we have gradually reduced it. Our ADR will go below the limit soon." 

"Now we do not disburse loans but focus solely only on bad debt recovery," he added. 

Sharia-based Union Bank's deposit was Tk11,549.13 crore against its lending of  Tk14,278.21 crore in the given month. The bank’s ADR stood at 95.02%.

Specialized Rajshahi Krishi Unnayan Bank deposit was Tk4,661.33 crore while the bank’s credit was Tk5,892 crore. Its ADR stood at 100.56%. 

National Bank deposit was Tk34,650.66 crore while the bank’s credit was   Tk34,529.59 crore. The bank’s ADR stood at 94.71%. 

NRB Bank deposit was Tk4,134.99 crore, against its lending of Tk3,754.38 crore. The bank’s ADR stood at 85.78%. 

NRB Global Bank deposit was Tk8,326.43crore while the bank’s credit was   Tk7,946.63 crore. The bank’s ADR stood at 85.94%. 

AB Bank deposit stood at Tk27,020.61 crore in November, against its lending of Tk24,379.06 crore. The bank’s ADR stood at 86.25%. 

In January 2018, the central bank instructed conventional scheduled banks to lower their advance-to-deposit ratio (ADR) below 83.50% by June, from the existing ceilings of 85%. Similarly, Islamic banks were asked to lower their ADR below 89% from 90% to contain aggressive lending practices.

However, in September last year, the central bank backtracked from its earlier decision and re-fixed the ADR at 85% for conventional banks and 90% for Shariah-based banks.

Talking to Dhaka Tribune, Mutual Trust Bank Managing Director and Former Chairman of the Association of Bankers, Bangladesh (ABB) Syed Mahbubur Rahman said: “Now the lenders and borrowers have taken wait and see strategy as the single digit lending rate would be implemented from April as per the government instruction. As a result, the private sector credit growth keeps dropping consistently.”

He also said that some banks were lending aggressively despite the slow private credit growth. It should be investigated why they were lending unjustly, he added. 

They should stop aggressive lending to survive in the industry, said Syed Mahbubur Rahman. 

The private sector credit growth dropped to a record low of 9.87% in November of this fiscal year, according to the central bank data. 

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