Sonali Bank faces crisis as clients reluctant to get loans

Posted by BankInfo on Wed, Jul 23 2014 10:30 am

The disbursement is Tk3,236 crore lower than Tk36,771 crore released in the first half of last year

Loan disbursement of the state-owned Sonali Bank dropped by 8.8% to Tk33,534 crore in June this year compared to same period of the last year as the bank has so far failed to disburse expected-level of loans among its clients.

The disbursement is Tk3,236 crore lower than Tk36,771 crore released in the first half of last year.

The bank published notices in the newspapers offering loans, but yielded no result so far, Sonali Bank Managing Director Prodip Kumar Dutta told a press conference at the head office of Sonali Bank in the capital yesterday.

“We are reminding the branch managers, heads of regions and general managers to enhance the loan disbursement,” he said.

“We have set the loan disbursement target for the branches and the performance of the branches is being strongly monitored by the head office.”

The adjusted loan growth rate of Sonali Bank was negative by 7.07% in the last year against the target limit of 8% set by Bangladesh Bank.

The total loan growth of the banks decreased by 11.67% or Tk3,963 crore in the last year, according to the Bangladesh Bank data.

The credit ceiling of Sonali Bank has been set at Tk1,328 crore for the year 2014, which is 6% of the adjusted loan status of Tk22,133 crore in 2013.

The bank won’t be able to achieve its loan disbursement target as the bank is also going through a financial crisis, said a senior executive of Bangladesh Bank.

The bank is yet to settle over 1,700 accepted bills with other banks, relating to Hallmark scam as the state-owned bank is suffering find crisis, he said.

Moreover, the bank is suffering from image crisis due to the Hallmark loan scam, he added.

“Though the bank suffered from capital shortfall of Tk278.43 crore in March this year, which was Tk821 crore in 2013, we will be able to meet the shortfall at the end of this year,’’ however, hoped managing director of Sonali Bank.

News:Dhaka Tribune/23-July-2014

Banks await $20b opportunity to invest in power

Posted by BankInfo on Wed, Jul 23 2014 10:20 am

StanChart analyses demand for loans in power sector

Md Fazlur Rahman

Bangladesh's power sector opened opportunities for private banks to lend between $10 billion and $20 billion by 2030, as the country struggles to narrow the gap between demand and supply of electricty.

The government plans to produce 39,000 megawatts of electricity by 2030 against estimated demand of 34,000MW at the time to fulfil its ambitious plan of taking power to all by 2021.

Plugging the energy gap will require $60 billion of additional investment up to 2030, Standard Chartered Bank said in an analysis.

“The government will not be able to fund this solely, which lends significant room for private-sector involvement,” it said.

Despite the government's substantial spending for the power and energy sector, the power sector needs increased private participation -- either from domestic or foreign sources, according to the analysis.

The share of private-sector financing in power projects will increase to 58 percent by 2016, according to the Power Development Board.

StanChart said previous large independent power producer projects had a debt component of around 60-70 percent, with the rest coming from equity financing.

Over time, as Bangladesh moves up the income ladder, a larger part of the debt financing is likely to come from bank lending, as the country is likely to become less eligible for multilateral concessional debt, the bank said.

"We think banks could provide up to a maximum of 50 percent of project financing over the medium to long term. If we assume a 60 percent private-sector share over the medium term, this suggests that $40 billion of the additional investment required for power projects up to 2030 must come from private sources," it said.

On this basis, the analysis sees minimum potential for bank financing of power projects until 2030 at $10 billion and maximum potential at $20 billion.

Private commercial banks have already stepped in.

Recently, StanChart raised $190 million from international lenders for a 335-megawatt electricity plant of Summit Meghnaghat Power Company Ltd in a single largest funding for any private power company in the country. The British bank itself has contributed $40 million to the fund.

Investing in energy capacity is likely to have a positive effect on growth. The $60 billion of investment has the capacity to raise nominal GDP by $50 billion by 2030, the bank said. The analysis also pointed to the failure of timely implementation of the project.

Between 2010 and 2013, only 50 percent of planned electricity generation was added to the grid.

"Timely project implementation will be crucial for achieving the power generation targets. Inefficiencies in project implementation need to be resolved at the earliest."

The analysis also touched upon the coal issue.

According the government's energy master plan, coal's share of electricity generation should increase from 3 percent currently to 20 percent by 2020, 30 percent by 2025 and 50 percent by 2030.

The government has drafted several coal policies, but there is no consensus on the issue yet, depriving the country of tapping its vast reserves of high quality coal.

"Political will and consensus building will be required to push forward domestic coal extraction – not easy when the issue of food security in a high-inflation country is at stake," according to the analysis.

"However, given that energy security is a top government priority, we are optimistic that clarity on the national coal policy will be forthcoming sooner rather than later."

Electricity shortage has high economic costs. The World Bank estimates that load shedding represents a loss of 0.5 percent in GDP and a $1 billion loss in terms of industrial output a year.

There are also financial and environmental costs of owning generators to compensate for power outages, StanChart said.

Islami Bank holds views exchange meeting

Posted by BankInfo on Wed, Jul 23 2014 10:09 am

Mohammad Abdul Mannan, Managing Director of Islami Bank Bangladesh Limited, speaks at a views exchange meeting and Ifter mahfil organised in honour of the representatives of foreign exchange houses’ liaison office in Bangladesh at a hotel in Dhaka on Monday.

 Islami Bank Bangladesh Limited (IBBL) organised a views exchange meeting and Ifter mahfil in honour of the representatives of foreign exchange houses’ liaison office in Bangladesh at a local hotel on Monday.

Mohammad Abdul Mannan, Managing Director of the bank attended the function as chief guest, said a press release.

News:Daily Sun/23-July-2014

Al-Arafah Islami Bank organises discussion

Posted by BankInfo on Wed, Jul 23 2014 09:58 am

Md. Habibur Rahman, Managing Director of Al-Arafah Islami Bank Limited, speaks at a discussion meeting on “Ramjan o Al-Quran (Ramadan and Al-Quran)” organised by Khilkhet Branch of the bank on Sunday.

 Al-Arafah Islami Bank Limited organised a discussion meeting on “Ramjan o Al-Quran (Ramadan and Al-Quran)” at its Khilkhet branch on Sunday.

Md. Habibur Rahman, Managing Director of the bank was present as chief guest in the meeting, said a press release.

Md. Sharif Chowdhury, Branch Manager of the bank presided over the meeting.

News:Daily Sun/23-July-2014

BKB leads in agri credit among public sector banks, Islami Bank in pvt sector

Posted by BankInfo on Wed, Jul 23 2014 09:47 am

The state-owned specialized Bangladesh Krishi Bank (BKB) is in the leading position in setting target for providing agriculture credit among all the 56 banks operating across the country in the fiscal 2014-15.

The BKB will distribute Tk 4800 crore agriculture loan among the farmers in the current fiscal. This was mentioned in the ‘Agriculture and Rural Credit Policy and Programme for fiscal year 2014-15’ announced by Bangladesh Bank on July 21. The central bank has set the target of total agriculture credit at Tk 15,550 crore for the fiscal.

As per the policy, the private and foreign banks will have to provide at least 2.5 per cent of the total credit to the agriculture sector while the new 9 banks have to provide 5 per cent of their total loan to the sector.

According to the policy statement, the BKB is followed by another state-owned specialized Rajshahi Krishi Unnayan Bank ( Rakub) with the target of Tk 16,00 crore.

Among the state-owned commercial banks, Sonali Bank leads the target with a fund of Tk 1180 crore while it is followed by the other three state-owned banks setting a target of Tk 750 crore by Janata Bank, Tk 660 crore by Agrani Bank, and Tk 150 crore by Rapuli Bank.

Among the private banks, Islami Bank Bangladesh Limited (IBBL) is leading the agriculture credit programme with a fund of Tk 790 crore. The IBBL is followed by AB Bank with Tk 270 crore, Exim Bank Tk 260 crore, Al Arafa Islami Bank Tk 251 crore, Prime Bank Tk 250 crore, UCBL Tk 250 crore, Pubali Bank Tk 235 crore, and National Bank Tk 230 crore.

The lowest target of Tk 3 crore was set for newly established Madhumati Bank while the other new banks’ target are Tk 50 crore for Union Bank, Tk 40 crore for NRB Commercial Bank, Tk 30 crore for South Bangla Agricultural and Commerce Bank, Tk 20 crore for Meghna Bank, Tk 20 crore for Midland Bank, Tk 13 crore for Farmers Bank, Tk 8 crore for NRB Bank, and Tk 28 crore for NRB Global Bank.

Among the foreign banks, Tk 222 crore for Standard Chartered Bank, Tk 10 crore for Al Falah Bank, Tk 19 crore for Commercial Bank of Ceylon, Tk 15 crore for Citibank NA, Tk 6 crore for Habib Bank, Tk 125 crore for HSBC, Tk 5 crore for National Bank of Pakistan, and Tk 3 crore for Woori Bank.

The Agriculture and Rural Credit Policy dictates that the banks provide the loan either directly or through partnership with NGOs or micro-finance institutions. 

News:Daily Sun/23-July-2014
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