BB directs SCBs to expedite default loan recovery drives
Monday, 27 July 2009
FE Report
The central bank of Bangladesh asked Sunday four state-owned commercial banks (SCBs) to take effective measures for reducing non-performing loans (NPL), particularly those of top 20 loan defaulters, to improve their financial health.
The Bangladesh Bank (BB) also instructed the SCBs to gear up their default loan recovery drives through adeptly handling the cases pending with courts, officials said.
The instructions came at a review meeting on the Memorandum of Understanding (MoU) of four SCBs - Sonali, Janata, Agrani and Rupali -held at the central bank with Deputy Governor Murshid Kuli Khan in the chair. Chief executive officers (CEOs) and managing directors of the SCBs were also present.
"We've cautioned the SCBs about reducing the volume of classified loans through expediting the ongoing recovery drives," a senior BB official told the FE, adding that the banks were asked to take necessary steps for vacating the writ petitions filed by different loan defaulters with the High Court.
The BB earlier asked commercial banks and non-banking financial institutions (NBFIs) to appoint senior and experienced lawyers to take legal measures, including applying for vacating the writ petitions filed by loan defaulters.
The SCBs have already appointed senior and experienced lawyers, particularly for vacating the writ petitions of loan defaulters, an executive of an SCB said.
"We've already taken effective measures to vacate such writ petitions as part of our drives for recovering default loans, particularly from top 20 defaulters," CEO and Managing Director of Janata Bank Limited SM Aminur Rahman told the FE.
However, the senior BB official said the top executives of SCBs informed that the overall default loan position would improve during the second quarter of the current calendar year.
He also said the SCBs' disbursement of loans increased following liberalisation of policies by the central bank raising the ceiling of single borrower exposure limits on an average by 5.0 per cent to meet the growing demand for corporate loans.
The ceiling of single borrower exposure limit of the Sonali Bank Limited has been raised to 10 per cent of its paid-up capital from 5.0 per cent. For Janata Bank Limited, the ceiling has been raised to 20 per cent from 15 per cent, for Agrani Bank Limited to 20 per cent from 15 per cent and for Rupali Bank to 25 per cent from 20 per cent, the official added.
"The SCBs have been performing better excepting recovery of default loans after they were corporatised in 2007," he noted.
The central bank of Bangladesh asked Sunday four state-owned commercial banks (SCBs) to take effective measures for reducing non-performing loans (NPL), particularly those of top 20 loan defaulters, to improve their financial health.
The Bangladesh Bank (BB) also instructed the SCBs to gear up their default loan recovery drives through adeptly handling the cases pending with courts, officials said.
The instructions came at a review meeting on the Memorandum of Understanding (MoU) of four SCBs - Sonali, Janata, Agrani and Rupali -held at the central bank with Deputy Governor Murshid Kuli Khan in the chair. Chief executive officers (CEOs) and managing directors of the SCBs were also present.
"We've cautioned the SCBs about reducing the volume of classified loans through expediting the ongoing recovery drives," a senior BB official told the FE, adding that the banks were asked to take necessary steps for vacating the writ petitions filed by different loan defaulters with the High Court.
The BB earlier asked commercial banks and non-banking financial institutions (NBFIs) to appoint senior and experienced lawyers to take legal measures, including applying for vacating the writ petitions filed by loan defaulters.
The SCBs have already appointed senior and experienced lawyers, particularly for vacating the writ petitions of loan defaulters, an executive of an SCB said.
"We've already taken effective measures to vacate such writ petitions as part of our drives for recovering default loans, particularly from top 20 defaulters," CEO and Managing Director of Janata Bank Limited SM Aminur Rahman told the FE.
However, the senior BB official said the top executives of SCBs informed that the overall default loan position would improve during the second quarter of the current calendar year.
He also said the SCBs' disbursement of loans increased following liberalisation of policies by the central bank raising the ceiling of single borrower exposure limits on an average by 5.0 per cent to meet the growing demand for corporate loans.
The ceiling of single borrower exposure limit of the Sonali Bank Limited has been raised to 10 per cent of its paid-up capital from 5.0 per cent. For Janata Bank Limited, the ceiling has been raised to 20 per cent from 15 per cent, for Agrani Bank Limited to 20 per cent from 15 per cent and for Rupali Bank to 25 per cent from 20 per cent, the official added.
"The SCBs have been performing better excepting recovery of default loans after they were corporatised in 2007," he noted.