The Bangladesh Bank has asked state-owned Sonali, Janata, Agrani, and Rupali banks to reduce their high amount of non-performing loans (NPLs), boost loan recovery from top defaulters, and quicken the pace of stimulus fund disbursement.
This directive came at a review meeting held on Thursday between the central bank and the four state-owned banks to discuss the financial situations of the lenders.
BB Deputy Governor AKM Sajedur Rahman Khan presided over the meeting. BB Executive Director Masud Biswas and General Manager Anwarul Islam were also present at the meeting.
The managing directors and chief financial officers (CFOs) of all four state-owned banks also attended the meeting.
This was a regular meeting, and every year, the BB sets a target to reduce NPLs and capital shortfall, and boost loan recovery, said the central bank Executive Director and Spokesperson Md Serajul Islam.
All four banks are very concerned about their capital shortfall, which is a negative indicator and they want to get out from the shortfall zone, he added.
The central bank has asked them to submit a work plan about the issue, Islam further said.
The four state-run banks jointly face a Tk 12,212.63 crore capital shortfall at present, as per data by the Bangladesh Bank.
In 2020, the four banks' indicators of business operations were poor. The lenders' defaulted loans remained high all the time, with some having both provision and capital shortfall.
At the end of December last year, the banks’ total default loans stood at Tk 34,175.28 crore, which was 38.51 per cent of the total defaulted loans in the sector, according to BB data.
At Tk 13,622.49 crore, Janata Bank has the highest amount of NPLs in the banking sector. The bank’s default loans make up 24.9 per cent of its total outstanding loans.
Agrani Bank currently has Tk 1,319 crore provision shortfall and Rupali Bank has Tk 821 crore provision shortfall.
"The central bank has asked us to boost loan recovery from the defaulters and increase stimulus fund disbursement," Agrani Bank Managing Director Mohammad Shams-Ul Islam told Dhaka Tribune.
BB has had a memorandum of understanding (MoU) with the banks since 2007 to improve their financial conditions.
Under the MoU, the central bank sets targets on various issues, including recovery from defaulters, maintenance of credit growth, reduction of losses and management expenses, and risk management for the banks.
Every six months, these goals are evaluated at meetings with the banks.
