Kazi Zahidul Hasan :Four state-owned banks (SoBs)–Sonali, Agrani, Rupali and BASIC– have miserably failed to achieve their loan recovery target in 2014 mainly because of poor recovery mechanism and borrowers’ apathy in repaying their debts, according to the Bangladesh Bank (BB).Janata Bank, the country’s second largest public bank, however, showed an impressive loan recovery performance with a rate of over 100 percent.Last year, BB had set Tk 4,680 crore default loan recovery targets for the SoBs, but they could recover onlyTk 2,641 crore. The recovery rate was 52.58 percent.These banks altogether had Tk 23,635 crore in default loan.In 2013, these banks have recovered Tk 2,978 crore default loan against the target of 5,601 crore with a recovery rate at 53.16 per cent. BB had set the target as per the MoU signed by the banks with it. Sonali was the worst performing bank among the SoBs, it recovered only Tk738 crore against a target of Tk 2,300 crore, showing a recovery rate of 35.14 per cent. The bank had an amount of Tk 8,644 crore default loan, according to a BB data. BB set Tk 150 crore loan recovery for Rupali Bank in 2014 and it recovered Tk 125 crore. The overall recovery rate was 83.33 per cent.The bank had Tk 1,237 crore default loan. Argani Bank recovered Tk 445 crore against a target of Tk 1,000 crore. The recovery rate was 44.50 per cent. The bank had Tk 3,706 crore default loan. Basic Bank recovered Tk 268 crore default loan against the target of Tk 630 crore, recording a recovery rate of 42.54 per cent. Janata Bank recovered Tk 885 crore against a target of Tk 800 crore showing over 100 per cent recovery rate. It had Tk 3,738 crore default loan.”SoBs could not show much success to recover loans mainly due to their weak debt management and laxity of the borrowers. Meagre recoveries are turning them to insolvent and help rising classified loans,” a senior BB official told The New Nation on Wednesday.He said, BB has asked the SoBs to strengthen their loan recovery drive taking bold measures.When asked, he said, default or classified loans in public banks were high mainly due to a lack of efficiency in fund management, obligatory financing towards social and economic priority sectors, and politically motivated lending.”Public banks are caught in the shackles of default or classified loans which could lead them into deep crisis,” former BB Governor Dr Salehuddin Ahmed told The New Nation. He said, the amount of their default loans could even go higher if the big borrowers are not availed special loan rescheduling facility.”A significant amount of loans has become classified as many large borrowers availed loans under the political consideration. Loan recover from such borrowers seems to be a taught job for the SoBs without imposing stringent policy,” he added. Dr Salehuddin Ahmed said the central bank should formulate tough loan recovery policy and take actions against the big borrowers. Besides, the government should forgo cultural of deploying board members under political consideration for improving their financial health.
