The central bank has asked two state-owned farm lenders to move away from big loans and focus on agriculture and SME (small and medium enterprise) credits instead, which can minimise default risks, an official said.
The instruction came Sunday at a meeting, where the memorandum of understanding (MoUs) of the Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) was reviewed. Bangladesh Bank Deputy Governor SK Sur Chowdhury chaired the meeting.
The central bank also asked the specialised banks for taking effective measures to improve their financial health immediately through expediting loan recovery drive across the country.
"We've asked the banks to expedite business activities as per their mandate," the BB deputy governor told the FE after the meeting.
He also said the banks have been instructed for taking effective measures to reduce the amount of bad loans by June 30 this year.
Both managing directors promised that they would bring down non-performing loans (NPLs) to 20 per cent by June 30, 2015 from the existing level, a BB official said.
The percentage of bad loans on total outstanding of the BKB and RAKUB reached more than 32 per cent in December last year.
"We'll try to lower the classified loan to 20 per cent from the existing level by June this year by intensifying our effort to recover the outstanding loans," Managing Director of the RAKUB Manjur Ahmed told the FE.
Meanwhile, the banks have been asked to meet their capital shortfall with the government's recapitalisation funds along with their own resources.
Capital shortfall of two state-owned agricultural banks - BKB and RAKUB - has crossed Tk 67.90 billion, putting them into a difficult situation to comply with the Basel-II requirement.
The capital shortfall of two banks rose to Tk 67.94 billion at the end of December 31 last year from Tk 67.41 billion three months back, according to the central bank statistics.
Both the banks have already sought recapitalisation support from the Bank and Financial Institutions Division (BFID) of Finance Ministry to meet their capital requirements, the BB official said.
MD of the BKB M A Yousoof was also present in the meeting.
The meeting also reviewed various issues, including liquidity situation, credit growth, operating expenses and cost of funds of the state-owned banks.
The BB had earlier signed the MoUs with the specialised banks to improve their financial performance by providing policy support.
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