Bangladesh Bank
Scams push up loan defaults The amount rises by Tk 7,282cr during July-Sept.
Bad loans increased by Tk 7,282 crore or 1.58 percentage points in the third quarter this year as a significant amount of loans related to the recent incidents of scams was classified.
The central bank is putting pressure on the banks to get the real picture of their loan defaults.
On September 30, the total amount of bad loans in the banking sector was Tk 36,282 crore or 8.75 percent of the total outstanding loans.
The amount was Tk 29,000 crore or 7.17 percent of total loans on June 30.
According to Bangladesh Bank statistics, the highest increase in such loans was in the state-owned commercial banks that saw a rise by Tk 3,746 crore in the third quarter.
The amount of total classified loans at these banks stood at Tk 15,518 crore on September 30.
The classified loans at the private banks also marked a rise, by Tk 3,280 crore during the same period, and reached Tk 13,585 crore.
Bankers said the central bank recently detected loan-related irregularities in some public banks, and put pressure on the banks to classify the loans.
Hall-Mark Group and some other businesses embezzled Tk 3,547 crore from Sonali Bank's Ruposhi Bangla branch on forged documents.
On November 18, Finance Minister AMA Muhith also said in parliament that a significant amount of funds was also embezzled through Sonali Bank's Gulshan and Agargaon branches.
The finance minister said incidents of forgery were also detected in the accounts of some customers of Rupali, Janata, Agrani and BASIC Bank.
According to BB statistics, the amount of bad loans increased by Tk 1,733 crore in Sonali Bank, by Tk 758 crore in Janata, by Tk 1,092 crore in Agrani, and by Tk 163 crore in Rupali Bank during the July-September period.
Though BASIC is not a state-owned commercial bank, it is run under the government's control. During the period, bad loans increased by about Tk 200 crore at BASIC Bank.
The entire amount of the money involved with the irregularities unearthed recently has not yet been classified and the loan defaults may increase further in December when these loans will be classified.
Pradip Kumar Dutta, managing director of Sonali Bank, told The Daily Star that Tk 400 crore, a portion of the loans taken by the Hall-Mark Group, was classified in September.
The rest of the amount is likely to
be classified in December this year,
he added.
On the increase in loan defaults, the Sonali Bank's chief executive said the amount of bad loans marked a rise as their recovery, write-off and rescheduling was less this year compared to the previous year.
He also said they wrote off around Tk 800 crore last year, but the amount was only Tk 2 crore so far this year.
Dutta also said, to realise the loans from the Hall-Mark Group, the bank has taken the Group's 88 acres of land as mortgage. The lands are worth about Tk 560 crore on conservative estimates made by the bank.
Another 45 acres of land are being taken as mortgage, said the official of the bank.
He said, as a result they hope to securitise about Tk 1,000 crore against the loans given to Hall-Mark.
A central bank official said the BB has tightened its supervision after the incidents of loan scams were detected in some state banks.
The central bank also identified irregularities in some private banks that have already classified the loans, leading to a rise in default loans in those banks, he said.
News: The Daily Star/Bangladesh/24-Nov-12
BB extends deadline for refund of classified term, farm loans
Bangladesh Bank (BB) has extended the deadline for repayment of classified term loan and agriculture credit by six months.
In a circular issued Thursday evening, the central bank authority asked the banks to comply with the extended timeline from the expiry date for repayment of last installment of classified term loans and agriculture credit.
“Because of the latest circular, banks will need less amount of money for adjustment of provisioning against classified loans. As result, banks net profit will increase,” said a BB official, seeking anonymity.
Earlier in June, the central bank had tightened the rules for banks and loan-defaulters to repay classified loans.
Following the BB’s move, the banks needed to keep extra money from profit for provisioning as the amount of classified loans had increased, according to the sources.
Banks were advised to follow other regulatory directives, which mentioned in the master circulars issued on June 14, sources said.
News: The Daily Sun/Bangladesh/23-Nov-12
BASIC Bank's bad loans pile up on aggressive lending
Aggressive lending has doubled state-owned BASIC Bank's non-performing loans (NPL) in just nine months this year, data shows.
The bank's NPL was 4.38 percent of its outstanding loans at the end of December last year, but the amount shot up to 8.10 percent in September this year, indicating a rise in its loan defaults.
Such loans were 4.83 percent of its total loans, both in 2009 and 2010.
Despite a dramatic rise in its bad loans, the bank's top officials think they are on the right track and the situation might improve at the end of the year.
“Some big loans were classified, pushing up the NPL of the bank,” Kazi Faqurul Islam, its managing director, told The Daily Star.
“Some of our loans were classified on qualitative judgment,” said Islam.
Data shows the bank received Tk 1,412.45 crore in deposits during January-September, but it lent Tk 1,456.71 crore during the period violating the Bangladesh Bank rules.
According to BB, a bank cannot lend more than 85 percent of its deposits.
“We're on an aggressive expansion drive; we cannot sit on idle funds,” said A Monaem Khan, deputy managing director of the bank.
Khan said the bank had only 32 branches in September 2009, but now it has 56, excluding those in the pipeline.
A fully government-owned bank different in its objectives from other banks, BASIC started its operations in January 1989.
The bank is a blend of development and commercial banks. Of the bank's total loanable funds, 50 percent are meant for small and cottage industries.
Recently, BASIC Bank came as news reports after the Anti-Corruption Commission launched an inquiry into alleged embezzlement of funds from the bank.
Finance Minister AMA Muhith also said in parliament that there were some irregularities in the bank, but he did not disclose the amount involved.
News: The Daily Star/Bangladesh/23-Nov-12
Scams push up loan defaults The amount rises by Tk 7,282cr during July-Sept
Bad loans increased by Tk 7,282 crore or 1.58 percentage points in the third quarter this year as a significant amount of loans related to the recent incidents of scams was classified.
The central bank is putting pressure on the banks to get the real picture of their loan defaults.
On September 30, the total amount of bad loans in the banking sector was Tk 36,282 crore or 8.75 percent of the total outstanding loans.
The amount was Tk 29,000 crore or 7.17 percent of total loans on June 30.
According to Bangladesh Bank statistics, the highest increase in such loans was in the state-owned commercial banks that saw a rise by Tk 3,746 crore in the third quarter.
The amount of total classified loans at these banks stood at Tk 15,518 crore on September 30.
The classified loans at the private banks also marked a rise, by Tk 3,280 crore during the same period, and reached Tk 13,585 crore.
Bankers said the central bank recently detected loan-related irregularities in some public banks, and put pressure on the banks to classify the loans.
Hall-Mark Group and some other businesses embezzled Tk 3,547 crore from Sonali Bank's Ruposhi Bangla branch on forged documents.
On November 18, Finance Minister AMA Muhith also said in parliament that a significant amount of funds was also embezzled through Sonali Bank's Gulshan and Agargaon branches.
The finance minister said incidents of forgery were also detected in the accounts of some customers of Rupali, Janata, Agrani and BASIC Bank.
According to BB statistics, the amount of bad loans increased by Tk 1,733 crore in Sonali Bank, by Tk 758 crore in Janata, by Tk 1,092 crore in Agrani, and by Tk 163 crore in Rupali Bank during the July-September period.
Though BASIC is not a state-owned commercial banks, it is run under the government's control. During the period, bad loans increased by about Tk 200 crore at BASIC Bank.
The entire amount of the money involved with the irregularities unearthed recently has not yet been classified and the loan defaults may increase further in December when these loans will be classified.
Pradip Kumar Dutta, managing director of Sonali Bank, told The Daily Star that Tk 400 crore, a portion of the loans taken by the Hall-Mark Group, was classified in September.
The rest of the amount is likely to
be classified in December this year,
he added.
On the increase in loan defaults, the Sonali Bank's chief executive said the amount of bad loans marked a rise as their recovery, write-off and rescheduling was less this year compared to the previous year.
He also said they wrote off around Tk 800 crore last year, but the amount was only Tk 2 crore so far this year.
Dutta also said, to realise the loans from the Hall-Mark Group, the bank has taken the Group's 88 acres of land as mortgage. The lands are worth about Tk 560 crore on conservative estimates made by the bank.
Another 45 acres of land are being taken as mortgage, said the official of the bank.
He said, as a result they hope to securitise about Tk 1,000 crore against the loans given to Hall-Mark.
A central bank official said the BB has tightened its supervision after the incidents of loan scams were detected in some state banks.
The central bank also identified irregularities in some private banks that have already classified the loans, leading to a rise in default loans in those banks, he said.
News: The Daily Star/Bangladesh/23-Nov-12
Call for cuts in bank interest rates Kazi Akramuddin introduces his panel for FBCCI polls
Businesses on Tuesday urged the government to cut bank interest rates to minimise the operational costs of companies.
The business people also demanded a direct voting system in the election of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) to ensure more transparency and accountability.
The country got very little investment last year due to the high bank interest rates, said Nazrul Islam Mazumder, president of Bangladesh Association of Banks.
“The bank borrowers only enhanced their old bank loans.”
Mazumder spoke at a programme to introduce the panel of Kazi Akramuddin Ahmed, leader of the panel, for the FBCCI polls for 2012-14 to be held on Saturday, at Ruposhi Bangla Hotel in the capital.
If Ahmed got elected, his first assignment will be to have discussions with the government on how to lower the bank interest rates to 12 percent from the existing 16 to 18 percent, he said.
He also asked Ahmed to work to lower the bank deposit rate to 10 percent for healthy competition in the banking sector.
At the function, Selima Ahmed, managing director of Nitol-Niloy Group, urged the government to reduce traffic congestion, harassment of police and prevent smuggling of different goods so that domestic manufacturers can be more competitive.
She also stressed the need for ensuring more business facilitation to women entrepreneurs.
“But you have to ensure transparency and accountability in the FBCCI and I want direct election in this apex trade body.”
A strong research cell should be set up for the trade body, said Jashimuddin, FBCCI vice-president.
He blamed last year's poor foreign investment in Bangladesh on weak infrastructure and lack of gas and electricity.
Laos saw a foreign direct investment (FDI) of a total of $18 billion last year when Indonesia received $24 billion, he said. But Bangladesh could hardly attract $5 billion FDI a year at a time, he said.
The bank interest rate could not be reduced for tighter monetary policy of the central bank, said AK Azad, FBCCI president.
Bangladesh Bank uncapped bank interest rate from 12.5 percent a few years ago as per the recommendations of the International Monetary Fund, said Azad.
The central bank uncapped the interest rate justifying that if the bank interest rate is not increased, the flow of money will increase in the local market, and there will have a big inflationary pressure on the economy, he said.
Later, Ahmed introduced his panel for 30 directorial posts (15 from chamber group and 15 from association group).
News: The Daily Star/Bangladesh/22-Nov-12