The banking division has sought specific plans from the state-owned commercial banks to bring down their huge amounts of default loans, which is progressively posing a threat to the sector's stability.
The six state-owned banks accounted for 48.38 percent of the sector's total default loans of Tk 99,371 crore at the end of September, according to data from the central bank.
The default loans of the six banks amounted to 38.23 percent of their total outstanding loans. Janata had the highest amount of default loans of Tk 14,376 crore, followed by Sonali at Tk 12,271 crore.
Subsequently, Banking Division Secretary Asadul Islam yesterday held a meeting with the managing directors of the state-owned banks, where he stipulated that the default loans will have to be brought down next year at any cost.
All banks were asked to send in their written proposals on how to reduce the bad loans. “This is just the beginning. More meetings will be held on this,” said a banking division official requesting anonymity.
Later, specific measures will be taken to reduce a handsome amount of default loans next year, he added.
In the past the banking division took several initiatives to improve the financial position of the state-owned banks, but the efforts were in vain.
“The problems at state banks are being discussed too much. The situation at private banks is much worse,” said a Sonali Bank official.
For instance, many of the defaulters of state banks are directors of private banks, and when the state banks take initiatives to recover the loans the defaulters thwart the efforts by filing writ petitions with the court, dragging the matter for years.
The official said they have urged the government to create a dedicated bench in the high court to settle the default loan-related cases.
“Many defaulter directors cannot be removed from the board due to weakness of the legal process. The rules should be such that the directorship lapses as soon as a loan of the concerned director becomes default.”
From next year Sonali's financial performance will improve much, he said.
As of December 26, the bank has realised default loans of Tk 2,777 crore, of which cash collection is Tk 922 crore.
After the meeting, Sonali Bank Managing Director Md Obayed Ullah Al Masud told The Daily Star that they will send their plan of action to slash default loans to the banking division “very soon”.