Banking sector experts advised that the state-owned Rupali Bank Limited should disburse more credit and advances to prospective borrowers in a bid to avert any long-term crisis.

They also advised the bank authority for attracting prospective entrepreneurs for taking loans from the bank.

They feared that the bank will face long-term crisis if its rate of loan disbursement slows down.

To make-up the banks’ growing costs for paying interests against higher deposits as well as increased salaries for new recruitment and also for expanding network by opening new branches, there is no alternative but to sanction new loans among potential borrowers, experts opined.

The credit growth of Rupali Bnak was 14.90 percent in December 2012 while in 2010 and 2011, the rate were 15.71 percent and 16.01 percent respectively.

In an official order in May 2013, the Bangladesh Bank limited the bank’s credit growth to 10 percent from previous rate of 15 percent. Later on September last year, the central bank, in a letter, advised the bank to reduce credit growth to 2.50 percent (on quarterly basis).

Senior banking sector experts recommend that the government should allocate the budget for credit disbursement by any bank ahead of the beginning of the year because the bank’s loan distribution activities are operated on the basis of field level target.

Besides missing the yearly credit disbursement target, then banks fail to fulfill the quarterly disbursement targets, they said adding, the similar problem arouse in case of Rupali Bank.

As a result, the banks’ credit marked a 13 percent growth, though it was set 10 percent by Bangladesh Bank.

The bank failed to maintain the central bank’s ceiling as the Bangladesh bank order was issued lately, they said.

M. Farid Uddin, Managing Director of Rupali Bank Limited said the total deposit of Rupali Bank stands at Tk 17,795 crore till December 2013 while its loans and advances amounts Tk 10,742 crore.

He said credit deposit ratio (CDR) is 60.37 percent but it needs 81 percent CDR for operating day-to-day banking activities. To maintain the level of CDR, the bank should raise its credit growth.

He also said, the bank paid Tk 13.50 crore interests on deposits, while its operating expenditure was Tk 473.55 crore, cash adjustment of goodwill value was Tk 241.73 crore. With these, the bank’s total expenditure totaled Tk 2,065.28 crore in the year.

There is no alternative to disburse more credits for making profits in order to meet the budget requirement, deducting Tk 660.79 corer incomes from total expenditure.

The credit of Rupali Bank grew in 2012 as non-funded liabilities of some reputed customers against letter of credit (L/C) turned into funded liabilities for non-compliance.

As a result, a forced loan amounting to Tk 708 crore was created. For the forced loan amount and also for increased interest payments against credit accounts resulted in huge credit balance, enhancing credit growth as well.

Sources also said that entire credit balance is not newly-sanctioned advances.

News:Daily Sun/28-Mar-2014