6 state banks under scrutiny over Tk1.49 lakh crore in default loans
The presentation covered the banks’ capital adequacy, profit earnings, non-performing loans (NPLs), recovery efforts, pending litigations, audit objections, and provision shortfalls
The financial health of the country's six state-owned commercial banks (SoCBs) came under scrutiny at a meeting chaired by the finance adviser, where officials of the Financial Institutions Division (FID) presented a detailed report on their performance until June this year.
The presentation covered the banks' capital adequacy, profit earnings, non-performing loans (NPLs), recovery efforts, pending litigations, audit objections, and provision shortfalls.
According to the report, the six banks are weighed down by an alarming Tk1.49 lakh crore in default loans, amounting to around 44% of their total disbursed credit. Of this, nearly Tk85 thousand crore — 57% of the total — is concentrated among just 20 top defaulters.
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The six state banks are - Agrani Bank, Rupali Bank, Sonali Bank, Janata Bank, BASIC Bank, and Bangladesh Development Bank.
"The main problem of the banks remains default loans," one official said after the meeting. The adviser directed bank management to strengthen recovery efforts, especially from the largest defaulters, while ensuring good governance. He stressed that boards of directors must not interfere in the day-to-day operations of the banks.
The meeting also revealed that about 48,000 cases involving default loans remain pending in courts. The adviser asked banks to bolster their law departments and said the FID would coordinate with the attorney general's office to expedite proceedings. Officials also discussed forming a special tribunal for default loan recovery, as seen in India, Pakistan, Sri Lanka, and Malaysia. However, no final decision was taken on this matter.
The adviser further urged the Bangladesh Bank and FID officials to modernise the insolvency framework in line with the Bank Resolution Act. He also called for quick resolution of audit objections, asking top management to be more "sincere" in addressing these issues.
Despite the challenges, the six state-owned commercial banks recorded an increase in deposits between January and June this year. Customers have continued to keep funds with the banks instead of withdrawing them, officials said.
Encouraged by this trend, the adviser directed the banks to accelerate loan disbursement from deposits to spur industrialisation, job creation, and overall economic recovery.
The meeting also noted that nearly 48,000 default-related cases are currently pending in courts. The adviser directed banks to strengthen their law departments and said the FID would coordinate with the attorney general's office to expedite proceedings. Officials also discussed the possibility of forming a special tribunal for default loan recovery, a system followed in India, Pakistan, Sri Lanka, and Malaysia.
Calling for "good governance," the adviser stressed that boards of directors must not interfere in banks' day-to-day operations. He also asked the central bank and FID to modernise the insolvency framework under the Bank Resolution Act, and urged top management to resolve audit objections without delay.
