A pile of bad loans have left the Bangladesh Krishi Bank (BKB) in the lurch, as unrecoverable loans continued to spike and irregularities in loan disbursement also engulfed the bank.

The ratio of bad loans or unrecoverable loan stood at over 71%, out of total 28% classified loans as of June this year.

Being worried about the BKB’s financial health, Bangladesh Bank has called a meeting today to discuss the bank’s latest performance and to find a way out for rescuing the bank sinking in bad loans.

The meeting is likely to discuss large loans, single borrower exposure, non-performing loans, capital deficit, provision deficit, write-off loan etc.  The managing director of the bank has been asked to attend the meeting.

The total classified loan of the bank stood at Tk4,562 crore against the total disbursement of Tk16,376 crore in June this year, according to the central bank data. Of the total classified loan, Tk3,250 crore has been identified as bad loans.

New classified loans of the bank are also rising abnormally. The amount of new classified loans increased to Tk763 crore in December from Tk279 crore in June last year.

But it decreased to Tk300 crore in June this year due to the rescheduling of huge loans, taking the advantage of relaxed policy, said a senior executive of the central bank.

The bank fell in capital shortfall and provision shortfall due to increase in non-performing loans. The capital deficit rose to Tk6,000 crore in June this year, which was Tk5,763 crore in December last year and Tk5,474 crore in June in the same year.

The provision shortfall of the bank stood at Tk1,581 crore in June this year from Tk1,691 crore in December last year.

The risk-based asset of the bank rose to 4% in June this year from negative 5.97% in December last year. 

The Capital Adequacy Ratio (CAR) that measured the risk-absorb capability, became negative 37.57% in June against the required CAR 10%.

The bank incurs a huge loss every year due to downturn of all financial indicators.

The net loss of the bank stood at around Tk500 crore in June this year from the loss of Tk194 crore in December last year.

Despite extreme deterioration of financial condition, the bank was involved in various irregularities, alleged a senior executive of the central bank.

According to the Bangladesh Bank findings, the bank renewed loan limit violating rules, gave loan exceeding exposure limit. Moreover, the bank hid large loan information to the central bank.

Despite being defaulter, the bank renewed LC (letter of credit) limit against two subsidiaries of SA Group.

The bank extended LC limit of Tk80 crore and Tk65 crore respectively for one year against the two.

The loan of Royal Plastic Industry amounting to Tk7 crore has been renewed after seven months of expiry, though the loan was supposed to be classified as doubtful.