Three state-owned commercial banks — Sonali, Janata and Rupali — applied to Bangladesh Bank to increase
their credit ceiling considering the banks’ financial health, said officials of
the central bank.
According to BB data, the central bank earlier set credit
growth targets for Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank at 6
per cent, 10 per cent, 10 per cent and 12 per cent respectively for 2014 from 8
per cent, 12 per cent, 10 per cent and 10 per cent for 2013.
Against the central bank move, the board of directors of the
three SCBs,
except Agrani Bank, applied to the
BB last week to increase their credit ceiling for 2014.
The Sonali Bank board
requested the central bank to increase its credit ceiling to 10 per cent from
the BB’s ceiling of 6 per cent and Janata
Bank to 12 per cent from the ceiling of 10 per cent, a BB official told New
Age.
The board of Rupali
Bank, however, did not mention its expected credit ceiling, but the bank
requested the central bank to reset the ceiling on the basis of its reasonable
business background, he said.
According to Rupali
Bank application, the bank appealed to BB to increase the credit growth in
accordance with its deposit collection from the clients.
Sonali and Janata requested the central bank to reset
their credit ceiling on the basis of their large business profile and financial
health.
The three banks said that credit disbursement was one of the
major indicators for any bank to earn operating profit.
The central bank may deny the proposals of the three banks
to increase their credit ceiling although it is yet to take decision formally
in this regard, the BB official said.
Another BB official said that the central bank had set the
limited credit growth targets for the SCBs for 2014 to reduce their high volume
of default loans, expedite their loan recovery rate and improve their core risk
management operations.
The BB started to set lower credit ceiling for the
state-owned banks since 2013 as the financial health of the banks deteriorated
massively in the period due to scams and corruptions.
The central bank unearthed a number of loan scams in the
past few years including Hallmark Group, Bismillah Group and S Alam Group loan
scams at Sonali and Janata banks and that was one of the key reasons for lowing
the credit expansion targets for the two SCBs, he said.
The central bank set the credit ceilings in accordance with
the memoranda of understanding signed between the BB and the SCBs.
Under the MoUs, the BB calculates the credit ceiling
excluding farm loans, staff loans and government borrowing to be provided by
the four banks.
The BB data showed that the four banks except Rupali failed
to achieve the credit growth in 2013 set by the BB.
In 2013, Sonali Bank posted a 7-per cent negative credit
growth, Janata Bank a 1.15-per cent growth and Agrani Bank a 0.63-per cent
negative growth.
Rupali
Bank, however, registered a credit growth of 13.98 per cent, surpassing the
ceiling of 10 per cent set by the central bank.
The BB official said the SCBs had adopted cautious policy to
disburse loans in last year that decreased the credit growth at the three
banks.
Besides, political unrest in the run up to the national
elections held on January 5 also created an adverse impact on their credit
growth as the majority of businesspeople were reluctant to take bank finance in
the period, he said.
News Source: New Age
Date:- 21-Apr-2014
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