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Trade loans rush in where Industrialists fear to tread |
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January 29, 2001
Dhaka-- (Bangla2000)- Finance Minister Shah AMS Kibria yesterday advised the nationalized commercial banks to contact asset-management companies to recover overdue loans through a sellout procedure. Like private banks the NCBs also can sell off the accounts of 20-25 defaulters to asset-management companies as a test case, he told the annual conference of regional officers of the state-run Sonali Bank, spelling out some other harsh measures for revamping banking sector. Finance Secretary Dr Akbar Ali Khan, additional secretary of the ministry Dr Shoeb Ahmed, Sonali Bank chairman Mohammad Ali and managing director Enamul Huq Chowdhury also spoke on the occasion at Hotel Purbani. The Finance Minister suggested two innovative steps— in-service training for mid-level officials and picking up talents from the young bankers—to improve service delivery and check the exodus of “blue-chip clients” from traditional banks to foreign and private banks. He also asserted that banks must come out of the culture of waiving interest, which he termed a distortion in banking that penalizes honest borrowers and rewards the corrupt. He assured the public-sector bankers of revising the terms and conditions of their service and offering them a separate pay scale as he felt that bankers in NCBs deserve better facilities to improve their efficiency and competitiveness. The Finance Minister was harsh to say that he sensed corrupt practice of bankers and clients when trade finances default, leading to bank’s reluctance in proceeding legal suits against the defaulters. He sounded a serious note of caution against the bank officials found involved in such fraudulence in lending. Rejecting any plea in favor of default on trade loans, Kibria said industrial defaulters are ‘angels’ compared to those who defaulted trade loans. He suggested that at least one general manager of each bank be assigned to deal with loan cases and recovery. To improve the level of competence and expertise, the Finance Minister felt the bureaucratic system that finds seniority the only yardstick of promotion should be overlooked and efficient young bankers should be tracked and put in key positions. Kibria appreciated the management of the largest state-run bank for its success in taming classified credits and increasing its deposits. But he expressed dissatisfaction over the rate of investment and asked them to detect why entrepreneurs do not turn up. Kibria asked the bank management to go for inward looking and find out whether it is due to long procedures or negligence in service delivery of bankers and initiate vigorous drives for loan-seekers. Sonali Bank’s deposits reached Tk 19738 crore as of December 31, which is 17 per cent higher than that in the previous calendar year. But loan and advances rose only 10 per cent over the last year. The bank earned a profit of Tk 114 crore last year. Although the percentage of classified loans dropped 9 per cent, the bank shouldered Tk 5100 crore of bad loans as on December 31, 2000. The Finance Secretary pointed out a serious allegation cited against some NCBs that depositors got their savings vaporized. Such an allegation is enough to damage the image of a bank, he said, advising the management to strengthen internal monitoring. Interest rate was lowered last year, but that did not yield better investment as the procedures still remained lengthy and transaction costs higher, the secretary pointed out. |