Special Correspondent :
The central bank expressed concern over the financial health of the state-owned Agrani Bank after it found a concentration of credit by fewer branches of the bank.
It also asked the bank authorities to immediately shape-up the credit concentration through an effective portfolio credit management issuing the warning that any failure in this regard could increase the tide of its bad loans.
“Only fifteen branches of Agrani Bank accounted for 71 per cent of its total defaulted loans, reflecting a poor portfolio credit management,” according to a report of Bangladesh Bank (BB).
It said such credit concentration by the small number of branches also pushed up overall defaulted loans at the bank.
The bank reported an amount of Tk 4,992 crore defaulted loans in its books as on June 30 this year. Of the amount, only 15 branches of the bank have accumulated Tk 3,511 crore default loans, according to a BB statistics.
“A lax credit management has led to higher loan concentration by fewer branches of Agrani Bank. This has seriously affected the bank’s financial performance,” a senior BB official told The New Nation yesterday.
He said, all the performance indicators of the bank are now declining in the wake of large loan scams, large capital short fall, high credit concentration by fewer branches and poor returns from its credit, threatening the viability and sustainability of the public bank.
Earlier, the central bank fired Agrani Managing Director Syed Abdul Hamid over loan irregularities and misuse of power in loan renewal.
The BB official said that the success of a bank largely depends on the effectiveness of credit and loan management system because the institution generates most of its income on loans extended to enterprises and individual borrowers.
“The authorities of Agrani Bank have apparently failed to develop an effective loan management system that led the scam-hit bank to further trouble,” he said, adding, “Loan management is a critical function of a commercial bank and failure in credit management help pushing up bad and doubtful debts in its balance-sheet”.
“A higher bad loan is affecting the bank’s profitability also,” he said.
The concentration of credit found Agrani’s seven branches in Dhaka, three in Chittagong, and Narayanganj, Rangpur, Khulna, Barguna, Rajshahi branches.
The central bank expressed concern over the financial health of the state-owned Agrani Bank after it found a concentration of credit by fewer branches of the bank.
It also asked the bank authorities to immediately shape-up the credit concentration through an effective portfolio credit management issuing the warning that any failure in this regard could increase the tide of its bad loans.
“Only fifteen branches of Agrani Bank accounted for 71 per cent of its total defaulted loans, reflecting a poor portfolio credit management,” according to a report of Bangladesh Bank (BB).
It said such credit concentration by the small number of branches also pushed up overall defaulted loans at the bank.
The bank reported an amount of Tk 4,992 crore defaulted loans in its books as on June 30 this year. Of the amount, only 15 branches of the bank have accumulated Tk 3,511 crore default loans, according to a BB statistics.
“A lax credit management has led to higher loan concentration by fewer branches of Agrani Bank. This has seriously affected the bank’s financial performance,” a senior BB official told The New Nation yesterday.
He said, all the performance indicators of the bank are now declining in the wake of large loan scams, large capital short fall, high credit concentration by fewer branches and poor returns from its credit, threatening the viability and sustainability of the public bank.
Earlier, the central bank fired Agrani Managing Director Syed Abdul Hamid over loan irregularities and misuse of power in loan renewal.
The BB official said that the success of a bank largely depends on the effectiveness of credit and loan management system because the institution generates most of its income on loans extended to enterprises and individual borrowers.
“The authorities of Agrani Bank have apparently failed to develop an effective loan management system that led the scam-hit bank to further trouble,” he said, adding, “Loan management is a critical function of a commercial bank and failure in credit management help pushing up bad and doubtful debts in its balance-sheet”.
“A higher bad loan is affecting the bank’s profitability also,” he said.
The concentration of credit found Agrani’s seven branches in Dhaka, three in Chittagong, and Narayanganj, Rangpur, Khulna, Barguna, Rajshahi branches.
