10 banks to come under BB’s close monitoring

Financially weak and scam-hit banks will come under close monitoring of the Bangladesh Bank as those lenders’ financial health worsens day by day.  

The central bank is going to sign memorandum of understanding (MoU) with weak and scam hit 10 banks in phases, said a high official of the central bank seeking anonymity.

The BB official said that the central bank will fix a deadline to improve the financial indicator and governance of the troubled banks. 

On the other hand, the troubled hit banks must submit their progress report to the BB from time to time, he added. 

The BB will appoint coordinators in those banks to find out the way of improvement, as per the BB high official. 

Bangladesh Bank Executive Director and Spokesperson Md Serajul Islam said to The Business Post, “I have come to know that the governor will sit with officials of 10 weak and scam hit banks to discuss how to improve their financial health.”  

However, Islam did not want to share the name of the 10 banks. 

As per the MoU rules, BB will set a target to improve those banks’ capital adequacy rate, capital shortfall, credit growth, the rate of classified loans, recovery against classified loans and weaknesses in management.

Bangladesh Bank Governor Abdur Rouf Talukder already met with the high officials of the problematic National Bank and the National Bank of Pakistan about the MoU, said BB officials. 

At the end of March of this year, National Bank’s bad loans stood at Tk 6374.22 which is 15 per cent of its total disbursed loans. 

Recently, BB found huge irregularities in the private sector banks including the violation of credit card-related regulations.

The National Bank allowed 11 persons, including its board directors and their family members, to spend a staggering $10.65 million (about Tk 91.4 crore) through credit cards, in a serious breach of banking rules.

The amount was spent from 2017 to 2021 by nine family members of Zainul Haque Sikder, the bank’s former chairman, and two top executives of Sikder Group, according to a probe carried out by the Bangladesh Bank.

They spent the amount violating the central bank policy that allows a Bangladeshi national to spend a maximum of $12,000 per year outside of the country through credit cards or cash.

On the other hand, the defaulted loans of the foreign- National Bank of Pakistan stood at Tk 1370.61 crore, which is 99 per cent of its total disbursed loans, as per the BB data. 

At present, 10 banks— Sonali, Janata, Rupali, Agrani, Bangladesh Krishi, BASIC, ICB Islamic and Padma have the central bank’s observer. But their financial health is still ailing. 

Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, alleged that the observers are not playing their role actively. “The problematic banks’ financial health is not improving as some observers are suborned by the banks,” he said. 

The government and the BB should be strict in such cases, said Mansur, also a former economist of the International Monetary Fund.

The observers must be held accountable as they were appointed to safeguard the general public’s deposits, he demanded.