Staff Reporter :The number of loss-making branches of the four state-owned commercial banks (SCBs) increased abnormally in the third quarter (July-September) of 2015 due to surge in the defaulted loans at the banks along with falling credit demand from the private sector, officials said.According to a latest data of Bangladesh Bank (BB), the number of loss-making branches of the four banks-Sonali, Janata, Agrani and Rupali-stood at 330 as of September 30 from 246 as of June 30 this year.The number of loss-making branches of Sonali Bank increased to 130 from 89, Janata Bank to 72 from 70, Agrani Bank to 72 from 66 and Rupali Bank to 29 from 21.Sonali, the country’s largest public Bank, has 1,189 branches across the country while Agrani, Janata and Rupali have 928, 902 and 547 branches respectively. When contacted, Farid Uddin, Managing Director of Rupali Bank, said, “We have installed core banking system in all the branches making additional investment that is why some branches incurred losses”. Each of the branches had to invest Tk 5 to Tk 7 lakh to develop the system, he added.”We have directed the concerned branch officials to take pragmatic steps so that they can turn the loss-making branches into profitable ones,” he said, adding, “The branches are expected to make profit by the end of 2016”. According to the BB data, the defaulted loans at Agrani Bank increased to Tk 4,720 crore as of September 30, 2015 from Tk 4,506 crore as of June 30, 2015. The defaulted loans account for 22.2 per cent of the bank’s total credit portfolio. Similarly, the defaulted loans of Rupali Bank increased to Tk 1,583 crore at the end of third quarter of the current year from Tk 1,552 crore in the previous quarter (April-June). The defaulted loan accounted for 12.17 per cent of the bank’s total credit portfolio.Defaulted loan of Sonali and Janata, however, declined slightly during the third quarter of the current year standing at Tk 7,918 crore and Tk 3,762 crore respectively.The defaulted loan of Sonali Bank accounted for 27.63 per cent of its total credit portfolio and for Janata, it was 12.37 per cent of its total disbursed loan. “Loan scams, soaring default loans and decreased credit growth in the banks can be held responsible for the upward trend in the number of loss-making branches of the four banks,” a senior BB official said.He added, the banks had to keep significant amount of provisions against their defaulted loans resulting in their operating profits into net losses.The BB official said the central bank repeatedly asked the SCBs to reduce the number of their loss-making branches. But, the number increased abnormally in the third quarter of this year as the banks did not take necessary measures in recovering defaulted loans.”The defaulted loans at the banks have recently increased as they disbursed significant amount of loans to clients considering their political affiliation”, he said. The BB official opined that the number of loss-making branches of the SCBs will not decrease if the internal control system of the banks is not strengthened in the months to come.
