Banks' credit growth continues to stutter despite the diffusion of political tension in January as banks exercise caution in lending to avoid bad loans.
As of May 15, the sector's overall credit growth from a year ago stood at 8.97 percent, according to central bank statistics.
The private banks' credit increased 14.07 percent, with some recording 20 percent to 38 percent growth.
But state banks saw their credit decline 5.11 percent and foreign banks 0.22 percent. Among the four state banks, Rupali's credit increased significantly, while the other three saw a fall.
Due to various corruptions including the Hall-Mark scam, the loan flow of state-owned banks has stalled, said Khondker Ibrahim Khaled, a former central bank deputy governor.
“The bank officials in general are in fear of giving out fresh loans,” he said.
However, Khaled said fresh loans have not completely stopped at state banks thanks to persuasion by influential quarters.
“Because of this the default loans of state banks are still on the rise—the central bank and the finance ministry need to take strict measure against this persuasion culture.”
Of the foreign banks, Standard Chartered Bank and HSBC saw their credit grow slightly.
However, most of the banks saw their deposits swell during the period, which squeezed their profits. As of May 15, overall deposit grew 16.48 percent year-on-year.
In a bid to maintain profit levels and log in high credit growth, many banks went for aggressive lending to rework the excess liquidity, according to Khaled.
“But banks that follow conservative banking have not yet gone for aggressive lending as uncertainty still looms over the business environment.”
Helal Ahmed Chowdhury, managing director of Pubali Bank, said loan growth of some banks are slow as they are exercising due diligence in sanctioning loan proposals.
Also the vice-chairman of the Association of Banks Bangladesh, Chowdhury said every bank must avoid aggressive lending to avert bad lending, while citing the huge amount of loans that have become defaults in Chittagong after the banks aggressively lent through Loan against Trust Receipt.

Md. Habibur Rahman, Managing Director, Al-Arafah Islami Bank Limited, and Engr. Uttam Kumar Roy, Commercial Manager of Dhaka WASA, exchange documents after signing an agreement at the Board Room of Al-Arafah Islami Bank in Dhaka recently.

 Al-Arafah Islami Bank Limited signed an agreement with Dhaka Water Supply and Sewerage Authority (WASA) on “Water and Sewerage Online Bill” at the Board Room of the bank in Dhaka recently.

Md. Habibur Rahman, Managing Director, Al-Arafah Islami Bank Limited and Engr Uttam Kumar Roy, Commercial Manager of Dhaka WASA signed the agreement on behalf of their respective organisations, said a press release.

Md Zafrin Hossain, IT Head, A. Karim Patwary, Deputy Chief Revenue Officer and Md. Arifuzzaman, Assistant Programmer of Dhaka WASA were present.

Bangladesh Development Bank Limited (BDBL) has registered Taka 81.19 crore profits in the first six months (January-June) of the current year.

The bank has witnessed 24 per cent growth in profit in the period than the previous year, although most of the state-owned banks faced fall in profit. The BDBL made profit of Taka 65.44 crore in the same period of the previous year.

Talking to BSS, Dr M Zillur Rahman, Managing Director of BDBL, said expanded treasury activities along with general banking and foreign commerce have boosted the profit of the bank.

He informed the bank is now financing in SME and agriculture sectors.

Meanwhile, the BDBL has signed four agreements regarding refinancing fund with the Bangladesh Bank, which has allowed the bank for refinancing of Taka 25 crore in bank rate, added Rahman.

At present, the bank has no provision deficit and it has Taka 1,150 crore reserved capital against the necessary capital of Taka 400 crore.

The bank has approved a total loan of Taka 149.58 crore in the period while disbursed loan of Taka 154.91 crore. During the period, the BDBL recovered due loan of Taka 139.11 crore 

Md. Abu Bakar Siddique recently joined Rupali Bank Limited (RBL) as Deputy Managing Director.

Bank and Financial Institutions Division, Ministry of Finance, issued a circular on 30 June on his promotion as Deputy Managing Director, said a press release.

Prior to his posting, he was General Manager, Human Resources Division of Janata Bank Limited.

Dhaka : Bank Asia opened three agent booths in Noakhali and Laxmipur districts on Sunday (15 June, 2014) in a move to financial inclusion of rural people, reports in a press release. Of the booths, Rumee A Hossain, Chairman of Bank Asia Board Executive Committee inaugurated two agent booths located respectively at Teuri and Panpara Bazar of Ramgonj upazila, Laxmipur while Mohammed Lakiotulla, Chairman of Bank Asia Board Audit Committee inaugurated booth Chasirhat of Sonaimuri Upazila, Noakhali.
M Irfan Syed, Director of Bank Asia, Md Arfan Ali, Deputy Managing Director (SMR), Quazi Mortuza Ali, First Vice President and Head of Alternative Delivery Channel (ADC) and other officials of Agent Banking program and local elites were present during opening of the agent booths.
Bank Asia, pioneer in agent banking in Bangladesh, has been expanding agent banking services all over Bangladesh as a part of financial inclusion of unbanked population.