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Financial condition of problem-banks improving gradually |
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February 7, 2001
Dhaka- (UNB) – National Credit and Commerce Bank Ltd (NCCBL) has come out of the central bank’s problem bank list. Bangladesh Bank decided to relieve NCCBL from the list Monday following significant improvement in its financial condition, said a press release yesterday. It said Bangladesh Bank observed that financial condition of other problem banks is improving gradually for intensive supervision, advice and guidance by the central bank. Earlier on August 1, 2000, Bangladesh Bank relieved National Bank from the list of seven problem banks considering its financial improvement. United Commercial Bank, City Bank, Uttara Bank and Rupali Bank still remained in the list. Identifying the reasons of weak financial situation of few commercial banks, the central bank began monitoring the activities of the banks in 1994 and directed them to come out of the problems within stipulated timeframe. NCCBL, a financial company transformed into a bank in 1990, was hit hard by asset management crisis and faced a capital shortfall of Tk 39 crore and provision shortfall of Tk 46 crore at the commencement of its banking activities, sources said. The bank’s classified loan stood around 17 per cent in 1997 that resulted in identifying the bank as problem bank as per the central bank’s CAMEL (Capital, Asset, Management, Earning and Liability) rating. Following a memorandum of understanding signed between BB and NCCBL in May 1998, the bank could lower its classified loans to 12 per cent, 3 per cent lower than the target set by central bank at 15 per cent. To recover capital shortfall, NCCBL floated primary shares in the capital market and also covered the bad debt provisioning, sources said. |