DHAKA, NOV 1: Almost all the state-owned banks and specialised banks are in deep financial trouble as their risk based assets are piling up day by day, officials said.
Indicators of financial health of the banks are negative, observed a Bangladesh Bank (BB) report recently sent to the bank and financial institution division under the finance ministry. The four state owned banks are Sonali, Janata, Agrani and Rupali, and four specialized banks --Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank ( RAKUB) and Bangladesh Development Bank Ltd (BDBL).
The financial pain faced by those banks is because of their rising default loan, capital deficits, mismanagement and irregularities, analysts said.
The BB recently wrote to the finance ministry to take necessary measures for bringing the troubled banks back on track.
Otherwise some of banks might be turned to ‘problem banks,’ said a BB official.
Default loan of the banks are ballooning every day, which is a matter of serious concern and if this trend continues, the banks might face a higher risk, he said.
As of June, 2012, Sonali Bnak’s default loan stood at Tk 858 crore, Janata’s Tk 295 crore, Agrani’s Tk 374 crore and Rupali’s Tk 137 crore respectively, according to a BB report.
During the period, the rate of their rising default loans was 15.45 per cent but the central bank had asked earlier the banks to bring such rate below 10 per cent.
Loan recovery is more depressing in the state-owned banks.  As of June, 2012, Sonali Bank recovered Tk 186 crore, which is only 27.13 per cent of the loan recovery target set by the BB.
Like wise, during the period Janata Bank recovered Tk 143 crore, which is 48.48 per cent of the loan recovery target, Agrani Bank Tk 136 crore, which is 35.71 per cent of the loan recovery target and Rupali Bank Tk 22 crore, which is only 17.84 per cent of the target.
According to BB statistics, risk based assets of Sonali Bank stood at Tk 35,457 crore in 2012 from Tk 23,345 crore in 2009, Janata Bank Tk 33,021 crore from Tk 1,095 crore from, Agrani Tk 20,855 crore from Tk 9,179 crore, Rupali Bank Tk 11,933 crore from Tk 5,662 crore. 
Default loan of BDBL recovered Tk 9.43 crore against its total default loan of Tk 310 crore as of June , 2012, said the statistics. 
Total risk based assets of RAKUB stood at Tk 3,435 crore as of 30 June, 2012 from Tk 3,117 crore in the same period a year ago. Its accumulated losses was Tk 503 crore as of June 30, 2012 from Tk 432 crore a year ago and its 217 out of total 369 branches  incurred losses, it said.
BKB’s risk based assets stood at Tk 19,221 crore as of 30 June, 2012. Its accumulated losses was Tk 2,747 crore as of June 30, 2012 from Tk 2,600 crore recorded in June 30, 2011. Its 185 out of total 985 branches incurred losses. From 2015, the banks will have to maintain capital as per Basel III requirements. Given the rise in loan defaults in state-owned banks, they would face many challenges to meet the Basel III requirements, said a BB official.
“Poor management is the main reason for the dire consequences faced by the state-owned banks,” said Khandoker Ibrahim Khaled, chairman of Bangladesh Krishi Bank.
He criticised the government for establishing a banking division, which according to him was busy transferring and promoting people.
In 2007, the then caretaker government turned Sonali, Janata and Agrani into companies so that the banks could function better. But the incumbent government in 2009 re-established the banking division under the finance ministry, which was in conflict with the company model, Ibrahim Khaled said. “The time has come to abolish the banking division; otherwise these banks will never run professionally,” said Khaled.

News: The Independent/Bangladesh/02-Nov-12