State banks miss loan recovery target

All four state-owned commercial banks failed to recover loans from the top 20 defaulters as per targets set by the central bank for the first half of the year.

The banks recovered a total of Tk 195 crore of the bad loans as of June, much lower from the target of Tk 1,565 crore.

Sonali, Janata and Agrani could recover less than 5 percent of the bad debts as of June. 

This is far below the satisfactory recovery level of 40 percent as per the banks' agreements with the central bank.

Among the four, Rupali performed better, as it recovered 68.33 percent of its bad debts, according to a review report prepared by the banking regulator.

The top 20 defaulters accounted for a third of the six state banks' total default loans in the first half of 2017, according to the finance ministry.

As of June, the defaulters owed Tk 11,579 crore to Sonali, Janata, Agrani, Rupali, BASIC and Bangladesh Development Bank.

The state banks could not recover the bad loans because of the writs filed by the defaulters, said Janata Bank Managing Director Abdus Salam.

“Influential clients have filed several cases against the defaulter status foiling banks' effort to recoup bad loans,” he said.

Sonali recovered Tk 13.89 crore from its top 20 defaulters as of June, which was 2.53 percent of target of Tk 550 crore, according to BB data.  The bank's bad debt with the top defaulters was Tk 3,484 crore as of June.

On the other hand, the bank recovered Tk 389.21 crore from the defaulters other than the top defaulters, which is 23.88 percent of the target of Tk 1,630 crore for the period.

Loan recovery from the top defaulters of Janata was the lowest among the four state commercial banks, amounting to Tk 9.71 crore, which is 2.62 percent of the target of Tk 370 crore. The top defaulters owed Tk 2,218 crore to the bank.

The recovery from the other defaulter borrowers was Tk 282.59 crore, which is 25.45 percent of the goal of Tk 1,110 crore. Agrani recovered Tk 21.19 crore from the top defaulters, which is 4.99 percent of the target of Tk 425 crore. The top defaulters owed Tk 1,169 crore to the bank as of June.

The recovery from other defaulters was Tk 368.13 crore, which is 28.87 percent of the target of Tk 1,275 crore.

Rupali recovered Tk 150.33 crore from its top defaulters against the target of Tk 220 crore. The bank has a default loan of Tk 2,232 crore with the top defaulters.

It, however, could recover Tk 65.42 crore from the other defaulters, which is 10 percent of the target of Tk 650 crore.

For the success, Rupali Bank Managing Director Ataur Rahman Prodhan credited the efforts the bank has put in place to recover the loans from the top defaulters.

“The intense effort on loan recovery has improved some indicators of the bank,” he said.

The operating profit of Rupali was Tk 190.63 crore in June, recovering from a loss of Tk 88.78 crore in December last year, according to central bank data.

High default loans weigh on the balance sheets and are a drag on the banks' profitability, experts said.