The central bank has warned the commercial banks against poor recovery of classified and written-off loans and asked them to intensify the recovery drives if they like to avert stern actions.

Bangladesh Bank (BB) issued the warning at a meeting with 20 banks on their loan recovery position at the central bank headquarters in the capital Monday, with deputy governor SK Sur Chowdhury in the chair.

Chief executive officers (CEOs) and managing directors (MDs) of the banks, which were identified for their poor loan recovery performances, took part at the review meeting, officials said.

The BB's move came against the backdrop of poor recovery of both classified and written-off loans during the October-December quarter of last year.

During the period under review, all 57 scheduled banks recovered Tk 33.86 billion, which was only 5.15 per cent of total non-performing loans (NPLs) amounting to Tk 658.08 billion as on September 30, 2016.

At the same time, the banks realised Tk 2.83 billion or 0.82 per cent of the total written-off loans of Tk 344.38 billion, according to the BB's latest statistics.

"We've asked the banks to intensify their recovery drives across the country. Otherwise, their capital shortfall will go up further and they may face financial problem," Mr. Sur Chowdhury told the FE.

He said the CEOs have the responsibility to recover such loans. "We may take action against the CEOs if necessary."

At the meeting, the BB advised the banks to appoint senior lawyers to settle legal problems and gear up their loans recovery drives, according to the BB officials.

The senior bankers informed the meeting that they were facing legal complexities in recovering the NPLs and written-off loans.

The banks have also been advised to take help from the Anti-Corruption Commission (ACC) in case of allegations of irregularities, they added.

The BB asked the banks to submit their quarterly recovery reports on NPLs and written-off loans to their board of directors so that the boards could take necessary measures.

Talking to the FE, a senior official of the BB said the central bank also asked the banks to provide recovery reports on NPLs and written-off loans properly to the designated BB department.

"The banks are taking very focused approaches in recovering the problem loans by increasing their day-to-day monitoring on their customers' loan accounts, particularly the large borrowers," Golam Hafiz Ahmed, MD and CEO of the NCC Bank Limited, told the FE.

The senior banker expressed the hope that the recovery of such loans would be improved in the coming quarters.

A K M Shameem, MD and CEO of the Farmers Bank Limited, said the banks will have to strengthen their recovery drives for their own survival.

The central bank had introduced the guidelines for writing off the classified loans in 2003, aiming to improve the loan recovery and make the financial statements of the banks more transparent and accountable.

Under the existing provisions, the bad loan portfolios remaining for a period longer than five years will come under the provision of written-off bad loans.

Before making any final decision on writing off any loan, the bank management has to ensure 100 per cent provisioning against the amount being written off.

On the other hand, the volume of NPLs jumped by more than 21 per cent to Tk 621.72 billion as on December 31 last year from Tk 513.71 billion on the same day of the previous year, the BB data showed.

The share of NPLs also came down to 9. 23 per cent during the October-December quarter of last year from 10.34 per cent three months back. It was 8.79 per cent as on December 31, 2015.