Finance and planning adviser Mirza Azizul Islam has expressed dissatisfaction over the performance of state-owned Sonali Bank Limited saying the bank has a scope to improve further.
"The bank will have to improve its services and financial performance further," said Dr Aziz after evaluating six-month performance of the country's largest state-owned commercial bank Thursday.
It could achieve some of the targets set for the bank over the last six month, he added.
Sonali could not improve its position relating to non-performing loans (NPL), which is one of the main indicators, he said.
It failed to improve its position as the state-owned enterprises (SOEs) did not repay loans timely while the recovery of NPL from the private borrowers has been hampered due to legal problems, he said.
Dr Aziz said steps are underway to clear the SOEs loans with the banks.
This was the first performance review meeting by the government on a state-owned commercial bank (SCB) after the SCBs were turned into public limited company early this year.
Performance evaluation meetings on two other SCBs- Janata Bank Limited an Agrani Bank Limited-will be held later.
Dr Aziz, however, said the performance of the bank has not deteriorated from the level before its corporatisation.
Cabinet secretary Ali Imam Majumder, Bangladesh Bank governor
Salehuddin Ahmed, senior officials of finance ministry were present at the meeting.
Meeting sources said the bank officials have been asked to become more professional to offer modern banking services to the clients.
The meeting warned that employees of the bank would not get additional incentives unless they show better performance, they said.
Dr Aziz said the SCBs have been beset with many problems as the NPL remains the main obstacle to better their performance.
"Main problem of the banks is their huge non performing loan," he said.
The non-performing loan of Sonali, Janata Bank Limited and Agrani Bank Limited has gone up during April-June period of the current year.
Central bank deputy governor Nazrul Huda, who heads the working group on SCBs restructuring, in a recent meeting reviewed the default loan recovery of the banks and termed their performance 'unsatisfactory'.
According to the review, the NPL of Sonali reached Tk 85.47 billion in June this year, which is about 44.35 per cent of its total loan. But until March, the amount of its bad loan was Tk 71.52 billion, or 39.06 per cent of its total loan.
Sonali's NPL shot up during the period despite recovery of Tk 2.46 billion from the loan defaulters, said the official.
Janata recovered about Tk 960 million worth of non-performing loan during the same period, but it still lagged behind the target by almost 1.0 per cent. Its NPL stood at Tk 19.65 billion until June, which is 15.99 per cent of its total loan.
NPL of the country's third largest SCB, Agrani, is still in red, as it stands at 27.50 per cent of its total loan until June against the central bank set target of 22.47 per cent.
The bank was supposed to recover Tk 1.35 billion worth of NPL in the April-June quarter, but it could manage only mobilise Tk 980 million during the period. Its NPL reached Tk 29.92 billion at the end of the financial year.
