International Monetary Fund (IMF) has expressed dissatisfaction over the huge rescheduling of bank loans as it criticised Bangladesh Bank for relaxing the rules, said a senior executive of the central bank.

They also refused to record the non-performing loan that claimed to have come down to 8.93% of the total outstanding loans in the last quarter of 2013 on ground that the NPL was reduced artificially from 12.79% in previous quarter, he told the Dhaka Tribune yesterday.

A delegation of IMF expressed the displeasure on the performance of state-owned banks at a meeting with Bangladesh Bank on Thursday last.

They are scheduled to hold another meeting with Bangladesh Bank today to discuss about the ground of relaxing the rescheduling guideline.

The delegation expressed concern that the unusual rescheduling of loans would hit the banking sector negatively in the coming years.

Bangladesh Bank relaxed the rules in December 2013 to facilitate the businessmen affected by the political unrest ahead of the national election held on January 5, and help the banks to show a reduced rate of NPL in their respective balance sheets.

As a result, the balance sheets of the banks reflected substantial fall in classified loans, which was increasing alarmingly till third quarter (August-September, 2013).

The country’s banking sector witnessed a substantial fall in non-performing loans (NPL) by around 4% or Tk16,137 in the last quarter (October-December) of 2013 from the previous quarter, because of the rules relaxed by the central bank.

The IMF team also expressed dissatisfaction over the performance of four state-owned banks as they could not comply with the conditions of MoU (memorandum of understanding) by the deadline of 2013 for recovering their financial health.

They criticised the weak controlling power of Bangladesh Bank and said: “You are telling same story repeatedly about the state-owned banks’ performance.”

The delegation strictly asked the central bank to take punitive action against the state-owned banks for their failure to meet the MoU conditions.

The state banks failed to achieve their loan recovery target while exceeding the loan disbursement limit in 2013, according to an observation of Bangladesh Bank under the MoU.

 In 2013, the four banks aimed to recover Tk5,379 crore from the default loans, but managed only Tk2,834 crore, which is 52.7% of the target.

The loan growth of BASIC Bank increased by 27.40% or Tk2,333 crore in 2003 which was supposed to increase by 20% from December 2012 in accordance with the MoU condition. At the same time the non-performing loan (NPL) of the bank increased by 81.52% or Tk576 crore.

Provision shortfall of the bank stood at Tk126 crore during the period. The capital adequacy ratio (CAR) of the bank remained far below at 4.50% from the central bank requirement of 10%.

The central bank show-caused the BASIC Bank recently as to why they will not be fined Tk10.02 crore.

Rupali Bank loan growth increased by 18.5% or Tk1,613 crore in 2013, which exceeded the MoU target of 10% from 2012, according to the Bangladesh Bank data.

The central bank asked the bank to transfer the excess loan to block account.