SCBs expect better NPL recovery in next 3 years

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Nazmul Ahsan
Four state-owned commercial banks have projected a remarkable improvement in the non-performing loan (NPL) situation by the fiscal 2012 on the back of their recent 'success' in the recovery of the same, sources said.
The banks-Sonali Bank Ltd, Janata Bank Ltd, Agrani Bank Ltd and the largely state-owned Rupali Bank Ltd have submitted their projection reports on NPL to the finance ministry last week. The ministry is now assessing the overall health of these banks.
Top executives of the banks concerned attributed the successes in the recovery of non-performing loans from defaulters in recent years to their all out efforts and said the mechanism would be strengthened further in next years.
''The target we have set to reduce the NPL by 2011-2012 is achievable if seen in the context of our past success and ongoing drive to recover classified loans from defaulters,'' Aminur Rahman, Chief Executive Officer, Janata Bank Ltd, told the FE.
The banks in question in their reports furnished the information on recovery of NPL between July 2008 and June 2009 highlighting their success in recovery in the last six months.
According to the projection, the NPL of Sonali Bank is expected to come down to 27 per cent in 2009-2010 fiscal, 22 per cent in 2010-2011 and 17 per cent in 2011-2012. The NPL of Sonali was estimated at 29.68 at the end of 2008-09 fiscal.
The Janata expects its NPL to come down to 7.55 per cent in 2009-2010 and 5.84 per cent in 2010-2011. The Bank as of August 9 last, when the report was sent to the ministry, could not finalise their NPL projection for the fiscal 2011-2012. The NPL of Janata was 11.05 per cent at the end of last fiscal (2008-09)
Agrani Bank has projected its NPL to decline to 10 per cent in 2009-2010, 4.0 per cent in 2010-2011 and 2.0 per cent in 2011-2012 respectively. Its NPL was 23.36 at end of fiscal 2008-09.
The Rupali Bank management has projected its NPL to come down to 24.48 per cent in 2009-2010 fiscal year, 19 per cent in 2010-2011 and 15.19 per cent in 2011-2012 fiscal. The bank is burdened with a substantial amount of classified loans. Its NPL share in the outstanding loans stood at 26.16 in the last fiscal.
The NPL of Sonali Bank declined to 29.68 per cent in the 2008-2009 fiscal year from that of 41.63 per cent in 2007-2008. Janata's classified loans declined to 11.05 per cent in 2008-2009 against 15.99 per cent in 2007-2008. Agrani's bad loan declined to 23.36 per cent in 2008-2009 from 29.79 per cent in 2007-2008 and the same of Rupali declined to 26.16 per cent in 2008-2009 from 39.33 per cent in 2007-2008, said the projection reports.
Sources in the Sonali Bank said the amount of NPL in Sonali as of June, 30, 2009 was Tk 68.70 billion (6870.94 crore), which was Tk 72.17 billion (7217.95 crore) in December 31, 2008.
"The recovery agents appointed by the Sonali Bank management and targets given to all bank branches played a vital role in realizing NPL from loan defaulters,'' a high official of Sonali told the FE.
Besides, settlement outside the court and easier terms in loan rescheduling have also helped in the recovery of about Tk 3.50 billion in bad loans during the period in the last fiscal, he said.
The amount of NPL in Janata Bank declined to Tk 14.26 billion (Tk 1426 crore) in June 30 last against Tk 14.63 billion (Tk 1463.01 crore) in December 31, 2008.
'Targets have been given to branches, recovery agents are serious, reminders to pay overdue loans are being given with due seriousness,'' CEO, Janata Bank Ltd, told the FE.
'The pace of NPL recovery would be faster as the economy is expected to do better in future years'' he added.
The NPL of Agrani Bank ltd declined to Tk 23 billion (Tk 2300 crore) as of June 30, 2009 against Tk 25.48 billion (Tk 2548.93 crore) in December, 2008, sources said.
Furthermore, the NPL of Rupali Bank Ltd came down to about Tk 13.30 billion (Tk 1330 crore) as of June, 30,2009 against Tk. 15.34 billion (Tk 1534.25 crore) in December, 2008.
''We have undertaken all out efforts to recover the bad loans both by appointing recovery agents, motivating defaulters and assigning our staffs,'' Syed Abu Naser Bukhtear Ahmed, CEO, Agrani Bank Ltd, told the FE.