Sonali Bank Ltd, the country’s largest state owned commercial bank, is now facing ‘concentration risk’ in credit portfolios arising from uneven distribution of large loans to individual borrowers.
Thirty individual borrowers, mostly public sector’s entities, owe the bank Tk 22,422 crore which is nearly 65 per cent of the bank’s total outstanding loans.
The outstanding loan of Sonali Bank stood at Tk 34,000 as of July 31 this year, according to an official figure.
Expressing concern over the concentration risk, Bangladesh Bank (BB) recently issued warnings to the bank, asking it to take immediate steps to reduce the risk.
“High loan concentration to a group of borrowers has been a source of concern for the central bank. Because this kind of credit concentration crippled the bank’s financial health limiting its ability of credit expansion to other sectors,” Subhankar Saha, a spokesperson and executive director of BB, told The New Nation yesterday.
He said, “We have issued warning to the Bank in this regard asking the authorities concerned to reduce their exposure to this group of borrowers immediately.”
The Directorate General of Defence Purchase (DGDP) ranked the top among the individual borrowers with Tk 4,982 crore loan followed by Bangladesh Power Development Board (BPDB) Tk 4,349 crore and Bangladesh Atomic Energy Commission (BAEC) Tk 1219 crore.
Beximco Group had a loan of Tk 1194.73 crore, Bangladesh Sugar and Food Industries Corporation Tk1,113 crore and Bangladesh Chemical Industries Corporation (BCIC) Tk 1,005 crore, according to the official figure.
Besides, North West Power Generation Company, Hall Mark Fashion, Bangladesh Agricultural Development Corporation (BADC), Bangladesh Petroleum Corporation (BPC), Max Spinning, Directorate General of Food, Electricity Generation Company of Bangladesh Limited and Anwara Spinning altogether had Tk 500 crore liabilities to the bank.
“We are aware of the situation. But what can we do. We have to entertain the public entities as per the ministry’s directive,” a senior executive of Sonali Bank told The New Nation on Wednesday, preferring anonymity.
He said, Sonali Bank is a public bank. So, traditionally, it has to finance the public entities and corporations. But the big credit accumulation by public entities has become a big headache for the bank which is now running with huge capital shortfall.
“Sonali is now finding it hard to finance new businesses amid capital shortfall and defaulted loans,” he said, adding, “A fresh capital injection is a must to run the bank smoothly.” The capital shortfall of Sonali Bank stood at Tk Tk2, 605 crore as of June 30 this year.
