Dhaka, Bangladesh (BBN) - The central bank has asked four state-owned commercial banks (SCBs) to increase their combined market share using the extensive branch network across the country, officials said.
The instruction came at a meeting for reviewing the Memorandums of Understanding (MoUs) of four SCBs – Sonali, Janata, Agrani and Rupali – at the conference room of the Bangladesh Bank (BB) Wednesday. BB Governor Atiur Rahman was in the chair.
Chief executive officers (CEOs) and managing directors of the banks were also present.
The central bank earlier signed the MoUs with the management of the SCBs aiming to improve their financial performance by providing policy support.
The directive came against the backdrop of a falling trend in market share of the SCBs vis-a-vis that of the private commercial banks (PCBs).
The SCBs' share in deposits stood at around 27 per cent while that in lending at around 23 per cent, according to the latest statistics of the central bank.
On the other hand, the PCBs hold around 60 per cent and around 64 per cent shares of total deposit and lending respectively, the BB's data showed.
"The scenario as far as SCBs' market share is concerned has reversed over a decade," the BB governor said at the meeting, adding that the SCBs should take effective measures to utilise their branch network properly.
Currently, the SCBs have 3389 branches out of total 7019 bank branches across the country.
"The SCBs are trying to improve their financial health. But there is scope for further improvement," BB governor told reporters after the meeting.
He also said the central bank will sign fresh MOUs with the SCBs shortly in which some new indicators such as financial inclusion and corporate social responsibility (CSR) would be included.
The central bank also asked the SCBs to take effective measures for reduction of their non-performing loans (NPLs), particularly those belonging to the top 20 defaulters, to improve their financial health.
The central bank chief expressed dissatisfaction over the loans recovery performance of the banks and asked them to gear up the default loan recovery drives across the country.
The Sonali Bank recovered 13 per cent of default loans from their top 20 defaulters during January-September period of the last calendar year while the Janata Bank realised 38 per cent of such loans.
During the same period, Agrani Bank recovered only 7.0 per cent of the loans from its top 20 defaulters while the Rupali Bank realised 46 per cent of the loans.
The SCBs have been asked to speed up the default loan recovery drives through pursuing the cases pending with the courts, the BB officials said.
The central bank earlier directed the commercial banks and non-banking financial institutions (NBFIs) to appoint senior and experienced lawyers for taking effective legal measures, with particular emphasis on vacating the writ petitions filed by the loan defaulters in the High Court.
The meeting also reviewed various issues including recovery of the overall default loans, liquidity positions, credit growth, operating expenses and cost of funds, they added.
The BB asked the banks to implement the existing core risk management guidelines properly for improving their efficiency.
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.
BBN/SS/SI/AD-07January10-12:55 am (BST)