Finance Adviser Dr Salehuddin Ahmed has asked the chief executives of six state-owned commercial banks (SoCBs) to take necessary steps for quicker recovery of their default loans.
He also advised them to ensure good governance in the banks, emphasising that the board of directors should not interfere in banks' day-to-day affairs in any situation.
The adviser also directed that all the activities in the banks should be carried out based on commercial merit.
Dr. Ahmed gave the directions on Wednesday at a meeting at the Finance Division, where managing directors of the six SoCBs, top officials from the financial institutions division (FID) and central bank attended.
At the meeting, the FID officials appraised the finance adviser of the six SoCBs' financial health until June this year, according to the meeting sources.
In the meeting, a presentation was made on capital situation of the banks, preservation of capital against risk-based assets, profit earnings, state of default loans, default loan recovery position, amount of money with the top-twenty defaulters and recovery of such loans from them, recovery from the written-off loans, number of pending cases, amount of money involved with the cases, audit objections and money involved with them, and provision shortfall.
The meeting discussed that at present the main problem of the SoCBs is default loans.
The six SocBs' total non-performing loans amounted to about Tk 1.49 trillion until June, which is around 44 per cent of their total disbursed loans.
Also, the meeting was told that there were some 48,000 pending cases with the courts linked to the default loans of six SocBs, which have to be resolved as soon as possible to recover stuck-up the money.
To this effect, the finance adviser asked the banks to strengthen their respective 'law departments.
The FID has been advised to contact the Attorney General and the prosecution teams to make sure lawyers' participate in case hearings for the sake of early settlement of such pending cases.
The meeting was informed that the six banks had about 57 per cent of their total default loans amounting to some Tk 850 billion with their top twenty defaulters. The banks have been asked to strongly monitor recovery of default loans from the top twenty 20 defaulters.
For early settlement of the audit objections, the adviser asked the top management of the banks to be more sincere regarding the recovery of the stuck-up money.
The finance adviser also asked the central bank and the FID officials to modernise the 'insolvency framework' in line with provisions of the Bank Resolution Act, meeting sources said.
The meeting also discussed issues including formation of a special tribunal for the recovery of the default loans.
Many countries including India, Pakistan, Sri Lanka, and Malaysia have high default loans and they have already formed such special tribunals to recover such money.
However, the finance adviser did not give a decision to this effect.
Sources said the meeting also discussed that banks have shown some sign of recovery despite the turbulent situation in the economy.
Each of the six banks saw a rise in deposit during the January-June period. Dr. Ahmed asked the banks to disburse loans quickly from the deposits they gathered so that the funds can be utilised for industrialisation, job creation, and economic recovery, the meeting sources said.
syful-islam@outlook.com
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