BB asks SCBs to manage assets, liabilities duly
Friday, 25 March 2011
Siddique Islam
The central bank Thursday asked four state-owned commercial banks (SCBs) to manage their assets and liabilities properly for avoiding any liquidity shortfall in future, officials said. The instruction came at a meeting held at Bangladesh Bank (BB) to review the memorandums of understanding (MoUs) of four SCBs - Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank, with the BB Governor, Dr Atiur Rahman in the chair. The Chief executive officers (CEOs) and who are also the managing directors (MD), of the banks were present at the meeting. "We've asked the SCBs to provide credit support to their clients, considering the deposit growth of each of such Banks to manage their assets and liabilities efficiently," BB Executive Director S K Sur Chowdhury told the FE after the meeting. He also said the central bank also instructed the SCBs to take effective measures to keep their credit-deposit ratio (CDR) within a safe limit. The SCBs will follow a 'go-slow strategy' for consumer financing in the near future to manage their assets and liabilities in line with the BB's advice, the CEO of a leading SCB told the FE. "We'll avoid purchasing loans from the private commercial banks to maintain our CDR at a rational level," he added. The SCBs have been asked to strictly abide by the existing core risk management guidelines for improving their efficiency, the central bank officials said. The central bank earlier identified six core risk areas in the country's banking sector. The risk factors are: credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering. At the review meeting, the central bank expressed dissatisfaction over slow disposal of pending cases, relating to default loans. The BB said the SCBs will have to speed up their drive for default loan recovery through pursuing the cases that are lying pending with the courts. The SCBs have been asked to take effective measures for reduction of non-performing loans (NPLs), particularly from the top 20 defaulters, to improve their financial health. Both the Sonali Bank Limited and the Janata Bank Limited recovered 19 per cent of the default loans from their top 20 defaulters during October-December period of the last calendar year. During the same period, the Agrani Bank Limited recovered 65.85 per cent of the loans from its top 20 defaulters, while the Rupali Bank Limited realised 22.17 per cent, according to the central bank statistics. The BB also asked the SCBs to make efforts for enhancing their competitiveness and increasing combined market share through improvements in the quality of their services. "We've asked the SCBs to develop their human resources to increase efficiency," a BB official said. The meeting also reviewed various issues, including overall recovery of the default loans, liquidity positions, credit growth, operating expenses and cost of funds.
The central bank Thursday asked four state-owned commercial banks (SCBs) to manage their assets and liabilities properly for avoiding any liquidity shortfall in future, officials said. The instruction came at a meeting held at Bangladesh Bank (BB) to review the memorandums of understanding (MoUs) of four SCBs - Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank, with the BB Governor, Dr Atiur Rahman in the chair. The Chief executive officers (CEOs) and who are also the managing directors (MD), of the banks were present at the meeting. "We've asked the SCBs to provide credit support to their clients, considering the deposit growth of each of such Banks to manage their assets and liabilities efficiently," BB Executive Director S K Sur Chowdhury told the FE after the meeting. He also said the central bank also instructed the SCBs to take effective measures to keep their credit-deposit ratio (CDR) within a safe limit. The SCBs will follow a 'go-slow strategy' for consumer financing in the near future to manage their assets and liabilities in line with the BB's advice, the CEO of a leading SCB told the FE. "We'll avoid purchasing loans from the private commercial banks to maintain our CDR at a rational level," he added. The SCBs have been asked to strictly abide by the existing core risk management guidelines for improving their efficiency, the central bank officials said. The central bank earlier identified six core risk areas in the country's banking sector. The risk factors are: credit, asset and liability, foreign exchange, information technology, internal control and compliance, and money laundering. At the review meeting, the central bank expressed dissatisfaction over slow disposal of pending cases, relating to default loans. The BB said the SCBs will have to speed up their drive for default loan recovery through pursuing the cases that are lying pending with the courts. The SCBs have been asked to take effective measures for reduction of non-performing loans (NPLs), particularly from the top 20 defaulters, to improve their financial health. Both the Sonali Bank Limited and the Janata Bank Limited recovered 19 per cent of the default loans from their top 20 defaulters during October-December period of the last calendar year. During the same period, the Agrani Bank Limited recovered 65.85 per cent of the loans from its top 20 defaulters, while the Rupali Bank Limited realised 22.17 per cent, according to the central bank statistics. The BB also asked the SCBs to make efforts for enhancing their competitiveness and increasing combined market share through improvements in the quality of their services. "We've asked the SCBs to develop their human resources to increase efficiency," a BB official said. The meeting also reviewed various issues, including overall recovery of the default loans, liquidity positions, credit growth, operating expenses and cost of funds.