Kazi Zahidul Hasan :The financial health of Rupali Bank is deteriorating fast following an alarming rise in defaulted loans in its overall credit portfolio.Defaulted loans at the bank rose sharply by 48 per cent in the second quarter (April-June) to Tk 2,361 crore, which is 15.31 per cent of its total disbursed loans.Rupali reported an amount of Tk 1,598 crore default loans in its books in the first quarter (January-March). The amount was 11 per cent of the bank’s total disbursed loans.It also reported Tk 775.56 crore provision shortfall at the end of June 30 this year. When contacted, Md Ataur Rahman, the newly appointed Managing Director of the bank, told The New Nation yesterday that he has already discussed the issue with the senior executives of the bank. “We have also chalked out several short and long-term plans to improve financial health of the bank,” he said.Rahman also said that the authorities of the bank set priority to rein in the tide of rising defaulted loans along with recovery of bad debts. “The Bank’s top management adopted aggressive lending policy for the last few years that mainly responsible for the swelling defaults loans,” a senior executive of the bank seeking anonymity told The New Nation yesterday.He said: Many loan proposals were approved through anomalies and corrupt practices to support the policy. These loans were not properly monitored causing the defaults. Necessary actions have also not been taken to realize them turning a significant portion of such loans into bad ones.According to an official figure, the total amount of defaulted loans at Rupali Bank was Tk 790 crore in 2010. But it went high to Tk 2,360.99 crore at the end of June this year. That means the bank’s overall defaults rose to Tk 1,570 crore within a span of five years. “Out of the total defaults, an amount of Tk 1,788 crore has already turned bad loans and their recovery is almost uncertain,” said the bank official. “The soaring defaulted loans has seriously impacted on both the financial health and lending ability of the bank. It has also badly affected the bank’s operating profit”, he added.The operating net profit of the bank stood at Tk 121.56 crore in 2012 and it came down to Tk 23.64 crore last year (2015) with Tk 228 crore capital shortfall.In 2015, the bank reported Tk 2,568 crore defaulted loans in its book of account, including the written off loan Tk 1,019 core, according to the financial statement of the bank.Rupali Bank distributed Tk 13,771 crore loans in 2015. As on June 30 this year, the amount stood at Tk 15,421 crore. “The financial health of Rupali Bank like other public banks is deteriorating rapidly mainly due to the higher volume of its defaulted and bad loans,” Dr Salehuddin Ahmed, a former Bangladesh Bank (BB) Governor told The New Nation on Tuesday.He said the bank sanctioned a large amount of loans under various influences and without diligence or through corrupt practices. Such loans later turned soured pushing up defaulted loans at the bank. “Poor portfolio and loan management is manly responsible for the ever-increasing accumulation of bad loans and stressed assets in the bank. The problem lies with the governance. So, radical reforms in the structure of governance are necessary to overcome the problem,” suggested Dr Salehuddin Ahmed.
