Four state-owned banks under BB\\\'s close watch

The central bank has brought the activities of four state-owned commercial banks (SoCBs) under its close monitoring to improve their financial health within a reasonable timeframe, officials said.
"We're working to bring a sustainable improvement to the SoCBs shortly through ensuring corporate governance in line with the signed memorandum of understandings (MoUs)," a senior official of the Bangladesh Bank (BB) told the FE on Thursday.
Under the moves, the central bank has appointed observers to the SoCBs for improving their financial health through proper implementation of the MoUs.
The central bank has taken the latest step against the backdrop of a deteriorating trend in the SoCBs' overall financial position, following different irregularities in the recent years, the BB official explained.
"We'll inform about different activities as well as decisions of the SoCBs to the central bank's departments concerned from time to time for taking necessary actions," BB executive director Mohammad Naushad Ali Chowdhury told FE.
Mr. Chowdhury, also an observer appointed to Sonali Bank Limited, said the observers will act as per rules and regulations for ensuring good governance through implementation of the MoUs.
BB Deputy Governor S K Sur Chowdhury briefed all four observers on Thursday about their responsibilities, another central banker said.
He also said the observers are empowered to attend policy-making meetings, including those of board of directors, executive committee and audit committee, of the SoCBs to oversee their functions.
The observers will emphasise improving internal control and compliance (ICC) of the SoCBs. They will take necessary measures for implementing the existing core risk guidelines properly to minimise the SoCBs' risks.
BB 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.
The observers will also work on different issues of the SoCBs, including recovery position of classified loans, credit growth, operating expenses and cost of funds, he added.
The total volume of non-performing loans (NPLs) with the six SoCBs stood at Tk 227.27 billion as on September 30, which was 21.82 per cent of their total outstanding loans.
The central bank included Bangladesh Development Bank Limited (BDBL) in the list of the SoCBs, instead of a specialised one or development-finance institution (DFI), in its classified-loan statement for the July-September period of 2015.
"We've included the name of BDBL as a SoCB in line with our board of directors' decision," the central banker noted.
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