Dhaka, Bangladesh (BBN)– The overall efficiency ratings of the country’s banking sector declined slightly in 2013 due mainly to higher volumes of non-performing loans, officials said.

The efficiency ratio of all banks stood at 77.81 percent that means the banks spend around 78 paisa to earn BDT 1.0 during the last calendar year. The ratio figure was nearly 74 paisa a year ago, according to the central bank statistics.

The aggregate efficiency level of specialised banks was at its worst, 94.83 percent in the bygone year. The state-owned commercial banks (SoCBs), private commercial banks (PCBs) and foreign commercial banks (FCBs) had the ratio counts as 84.07 percent, 77.90 percent and 50.40 percent respectively.

“The volume of classified loans almost doubled in 2012 following large-scale financial irregularities in different commercial banks,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.

The amount of default loans jumped to BDT 427.26 billion in 2012   from BDT 226.4 billion in the previous calendar year, the BB data showed.

The BB official also said the central bank is now working to ensure credit discipline in the country’s banking sector through strengthening its monitoring and supervision.
The position of NPL stood at BDT 405.83 billion in 2013 following a substantial amount of loan having been rescheduled by the banks by banking on advantage yielded by relaxation of the loan- rescheduling policy.

Earlier on December 23 last year, the central bank relaxed the rescheduling policy on a limited scale for the next six months to facilitate the financing for the businesses affected by political unrest.

The amount of classified loans increased significantly in the first quarter (Q1) of 2014 due mainly to lack of proper oversights on rescheduled loans.
The volume of classified loans increased 18.70 percent to BDT 481.72 billion in the January-March period of 2014 from BDT 405.83 billion this quarter of the last calendar year.

“The banks have to apply due diligence for both sanctioning and disbursement of loans properly to avoid adverse classification of loans which has the highest impact on the efficiency ratio,” another BB official said.

He also said the banks will have to improve internal control system through improving efficiencies of their officials concerned alongside giving freedom of work.

BBN/SSR/AD-29JUly14-2:01 pm (BST)