State-owned banks still in a sorry state

Exactly when the state-controlled banks will be able to improve their performance has become the million-dollar question.

The question has once again come to the surface as Bangladesh Bank released its data on the non-performing loans (NPLs), provision shortfalls, and some other indicators.

Take the case of NPLs.

As of September this year, NPLs in the Bangladeshi banking sector stood at Tk94,440 crore, accounting for 8.88% of total outstanding loans. Of these, Janata Bank made up Tk13,921 crore or nearly 15% of the total NPLs.

Sonali — the largest state-owned bank in terms of branches and deposits — has been burdened with over Tk10,197 crore NPLs during the period.

Let’s not talk about the scam-hit BASIC Bank, which was almost destroyed between 2010 and 2014 by the then Chairman Sheikh Abdul Hye Bachchu. Once the best public bank is now struggling for its survival and still bears the burden of his malpractice.

BASIC Bank’s NPLs totalled Tk7,607 crore. In terms of provision shortfall, BASIC topped the list with over Tk3,233 crore caused by its high level of NPLs.

Agrani Bank has the third-highest NPLs amounting to Tk6,393 crore, followed by Rupali Bank with Tk4,102 crore.

Of the private banks, first-generation AB Bank has the highest NPLs of Tk4,473 crore, followed by National Bank with Tk3,693 crore.

The high NPLs put the depositors’ money at stake and bring distrust among the international banks, analysts say.