30pc of Rupali Bank’s NPLs belong to 20 top defaulters - Share market analysis of dhaka stock exchange, Bangladesh

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05 February, 2017 10:09 AM Source: The Financial Express Bangladesh
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Over 30 per cent of the non-performing loans (NPLs)s belong to 20 top defaulters of Rupali Bank, according to governor of Bangladesh Fazle Kabir.

"These defaulters should be closely monitored and pursued by the Rupali Bank as per policy and law," governor Kabir said while speaking as the chief guest at the annual business conference of Rupali Bank at the Krishibid Institution in Dhaka Saturday last.

Speakers told the conference that the state-owned commercial banks were lagging behind as far as the competition with their private sector counterparts is concerned due to various reasons, including lack of good governance, ignorance and stubbornness.

They also urged the bankers to choose the right kind of entrepreneurs and borrowers and treat them as per the law. He advised them not to be influenced by the identity of the defaulters.

The amount of total classified loan of Rupali Bank was Tk 30.29 billion until September 2016 which is about 19 per cent of the total outstanding loan amounting to Tk 131.57 billion, according to the central bank statistics.

Mr Kabir said good governance is very important for every organsiation and is

essential for the banking sector. Banks must ensure good governance and internal control and compliance alongside it.

The governor also laid emphasis on following various guidelines, policies and targets set for Rupali Bank to avoid any mismanagement including the limit of single borrower exposure and shared loan.

He also suggested the bank to disburse more loans to small and medium enterprises (SMEs) with special focus on manufacturing sector.

"You should have focus on SME loans, especially in manufacturing-focused loans. Bangladesh Bank has been considering setting a target of SME loans like that of agricultural loans," he said.

The BB governor informed the conference that the four state-owned banks control 26 per cent share of deposits and 17 per cent loans in the market.

Although these banks have a widespread network of 3,603 branches which is 37 per cent of the total branches of banks, their non-performing loan (NPL) ratio is quite high.

"Of the total classified loans in the banking sector amounting to Tk 657.31 billion, the four public banks' share is Tk 222.87 billion. Average NPL rate of all banks is 10.34 per cent but the four banks' NPL is over 20 per cent. The Sonali Bank has the highest and the Janata the lowest volume of classified loans belonging to four public banks," said the governor.

Banking division secretary Yunusur Rahman said the public banks are behind the private ones in almost every indicator. The scenario is the worse in the case of classified loan.

Time has come for the banks to find ways of providing the aspirant borrowers with collateral- free loans like that of microfinance.

"Mind-set or cultural gap has damaged the quality of service delivery by the public banks. But bankers must find out ways to be competitive," he said.

Criticising various irregularities, Mr Rahman said there are 50 people working in Dhaka branches of banks in place of 20 people whereas only three people are working in rural branches.

Besides, the trade union should work for the welfare of the staffs but the union leaders cross the limit and remain busy in lobbying for loans and transfer.

Chairman of Rupali Bank board of directors Monzur Hossain said the bank has made many mistakes in the past and no specialist or consultant is needed to detect those.

"We can solve the problems that we have created. It is easy to identify the big defaulters and then treat them as per the law," he suggested.

Rupali Bank managing director and chief executive officer Ataur Rahman Prodhan said Rupali Bank showed profit in 2015 which was not genuine. The bank had Tk 2.44 billion NPL until September 2016 and 144 losing branches. Within three months, the bank realised Tk 3.0 billion and reduced the number of losing branches to 80.

He identified shortage of capital as a big problem for which the bank has applied for issuing bond worth Tk 5.0 billion.

Besides, the default loans, which are mostly in industrial credit, of the bank are concentrated in Dhaka.

Rupali Bank has decided to reduce concentration risk and spread service up to district, upazila, and union level and increase loan up to 40-45 per cent in SME sector. 

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