State-run Sonali Bank Limited, which now holds the third largest loan portfolio and the second highest volume of defaulted loans among the country’s scheduled banks, missed its defaulted loan recovery target by a huge margin in the year 2019.
The Sonali managed to recover only Tk 820.35 crore in cash along with regularising Tk 2,377.1 crore in defaulted loans, taking its defaulted loan recovery to Tk 3,197.45 crore in last year, according to a report of the entity.
The amount of defaulted loans recovered by the Sonali represents only 48.12 per cent of its Tk 6,645 crore recovery target set by the finance ministry for the year.
The amount of cash recovery by the Sonali is only 6.73 per cent of the annual defaulted loan recovery target set by the government.
The overall loan recovery of the bank also dropped by 13.01 per cent or Tk 477.55 crore in 2019 compared with its Tk 3,675.72 crore defaulted loan recovery in the year 2018.
An official of the bank said that the defaulted loan recovery by the Sonali in the year 2018 was high when only BEXIMCO Group regularised Tk 1,463 crore in defaulted loans, along with some other business entities, ahead of the national election.
The loan rescheduling or recovery in 2019 dropped as there was no such event like national election, he said.
Of the branches of Sonali Bank, 14 out of 15 branches including the head office missed the defaulted loan recovery target.
Only the Rangpur general manager’s office achieved its Tk 164.16 crore defaulted loan recovery target.
Each year the Bangladesh Bank signs memorandums of understanding with all state-owned banks as part of its measures to speed up defaulted loan recovery.
The measures, however, appear to have been ineffective as the BB has never taken any punitive measure against the SoEs’ failure in this regard, officials of the central bank said.
Sonali Bank also missed the written-off loan recovery target by a huge margin.
The bank managed to recover only Tk 44.6 crore against the Tk 710 crore loan recovery target set by the government. So far, scam-hit Sonali has written off loans worth Tk 7,094 crore from its ledger.
Instead of improvement, the overall defaulted loans of Sonali Bank increased in the year 2019 by Tk 558.7 crore to Tk 12,747.04 crore at the end of September last year from Tk 12,188.34 crore at the end of December, 2018. The amount of defaulted loans in Sonali is 29.27 per cent of the entity’s outstanding loans of Tk 43,547.87 crore.
Since assuming office in January last year, finance minister AHM Mustafa Kamal has been stating that bankers would have to recover bad loans, amount of which is a great concern for the nation.
He also mentioned that the volume of the defaulted loans would not increase further.
However, the amount of defaulted loans in the country’s banking sector increased to Tk 1,16,288 crore at the end of September, 2019 from Tk 93,911.4 crore in December, 2018.
BB officials said that the achievement of defaulted loans recovery targets by the other state-owned banks was not that satisfactory either.