State owned banks in Bangladesh are maintaining an elevated level of loan concentration among a handful of clients, putting their own financial health as well as the safety of depositors’ money at high risk. It is incredible that four state owned banks – Sonali, Janata, Agrani and Rupali – have lent a combined amount of Tk 67,264 crore to only 78 companies while the concentration is high among a few. Statistics show Sonali disbursed 31 per cent of its total outstanding loans through five branches to show the loan intensity, while Janata distributed 72 per cent of total loans through a similar number of outlets. The ratio is 47 per cent for Agrani Bank and 61 per cent for Rupali Bank. If the non-funded loans given out by the banks are taken into account, the credit concentration is much larger.
The four state-run lenders disbursed heavily among 25 clients, bypassing the single borrower exposure limit set by the Bangladesh Bank. Banks are allowed to disburse a maximum of 35 percent of their capital in the form of funded and non-funded loans to a single borrower but given the number of few powerful borrowers state owned banks have broken all these limits. Sonali Bank heavily disbursed loans in favour of 15 companies. The bank has given about Tk 70,000 crore to settle L/Cs of Rooppur Nuclear Power Plant. AnnonTex and Crescent groups took large amount of loans from Janata Bank breaking rules and their entire loan seems to be a non-performing one. Janata Bank is desperately trying to recover the funds. Similarly Agrani Bank disbursed Tk 12,893 crore among 13 companies, many of them are in default. Twenty-five clients took major part of loans from Rupali Bank.
We are appalled to note that the banking sector has become structurally quite imbalanced drawing deposits from all over the country, but only a few big business houses are exploiting funds breaking laws and loan limits. The private sector banks have become almost family banks concentrating common people’s deposits and then exploiting or even stealing those under fake project loans. About 50 percent of the people have no access to banking while only about 10 percent or less are exploiting bank deposits and laundering money out of the country. We would say the banking sector can’t claim to represent the people. Banks have turned out to be institutions for rich people.
