NCBs achieve 21pc of year’s recovery target

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The three nationalised commercial banks (NCBs), converted to public limited companies recently, have so far managed to achieve only 21 percent of this year’s target of recovering loans shirked by the top 20 defaulters.

During the same period, the first nine months, they have attained 68 percent of the target for other defaulters.

The banks–Sonali, Agrani and Janata–have trouble recovering the money from the defaulters since they can easily take out court orders to halt the loan recovery drives, observed bank officials at a meeting with the Bangladesh Bank (BB) governor yesterday.

First of its kind since the NCBs were turned into government-owned commercial banks (GCBs) last month, the meeting discussed how to improve the financial situation of the banks.

BB Governor Salehuddin Ahmed said he would request the law ministry to look into the legal complexities that confront the banks trying to recover large loans.

Chief executive officers (CEOs) of the banks requested the central bank boss to liberalise for them the conditions in the memorandums of understanding (MoUs) aiming at better performance of the financial institutions.

Briefing newsmen after the meeting, the BB governor said the MoUs were signed back in 2003, but things have changed now with the NCBs converted to public limited companies.

“The Bangladesh Bank will ease various rules set in the MoUs,” he said adding that it would take some time though.

Talking about concern that the three banks continue to be undermanned, the BB governor said the GCBs would undertake a process to recruit staff on their own. Besides, the government has already been approached for recapitalisation of the three banks, he added.

The meeting was told that the banks were running short of capital due to government borrowing.

BB data shows, the three GCBs have realised only Tk 45 crore between January and September against the year’s target of Tk 216 crore from the top 20 defaulters.

During the period, Tk 600 crore has been realised from other defaulters against the target of Tk 880 crore.

Of the GCBs, Sonali Bank Limited has recovered only Tk 3.29 crore from the top defaulters while its target is Tk 169 crore. The recovery rate against the target is only 1.94 percent.

Agrani Bank Limited has retrieved only Tk 2.39 crore, which is 12 percent of the target of recovering Tk 19.8 crore of classified loans.

Janata Bank Limited, however, has already recovered 143 percent of its target. It has recovered Tk 39.47 crore from the defaulters when it had aimed for Tk 27.5 crore.

In case of other defaulted loans, Sonali Bank realised Tk 293 crore against the target of Tk 440 crore, Janata Bank recovered Tk 141 crore against Tk 165 crore and Agrani Bank realised Tk 166 crore against a Tk 275-crore target.

According to BB data, capital shortfall at the GCBs stood at Tk 6,643 crore as of September 30, 2007. Of the amount, Sonali Bank has Tk 4,310 crore, Agrani Bank Tk 1,948 crore and Janata has a shortfall of Tk 959 crore.

The BB asked for suggestions on how the banks should earn the minimum capital status.

Credit growth at Sonali Bank in the first nine months of the year has risen by 0.03 percent on the corresponding period last year. Janata Bank and Agrani Bank, however, have seen negative credit growth, 7.81 and 1.48 percent.

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