The New Nation - Internet Edition

Staff Reporter

The Ministry of Finance yesterday expressed dissatisfaction over the performance of Sonali Bank Limited, the country's first largest commercial bank, during the first half of the current year.

In the wake of shooting up of the non-performing loans or bad loans of three state-owned commercial banks (SCBs)-Sonali Bank Limited, Janata Bank Limited and Agrani Bank Limited-a high-powered committee of the government started reviewing the performance indicators of the three SCBs from yesterday.

With Finance Adviser Dr Mirza Azizul Islam in the chair, the members of the committee sat at a meeting at the Finance Ministry to review the performance indicators of the three SCBs in the context of the failure of recently corporatised Sonali, Janata and Agrani banks to achieve default loan recovery targets.

Other issues like credit disbursement, cost of fund, operating cost and automation of the SCBs came under review at the meeting.

However, the committee reviewed the performance of only Sonali Bank Limited yesterday, while it will review on Janata Bank and Agrani Bank next week.

The non-performing loans of Sonali Bank Limited have gone beyond the limit, undermining the financial health of the bank.

Meeting sources said the extent of Sonali Bank's default loans has increased during the six-month period--from Tk 6,860 crore in December 2007 to Tk 8,547 crore in June 2008.

The officials and employees of the Sonali Bank Limited would not get additional incentives unless they show better performance, the meeting was told.

A senior official, who attended the meeting, told The New Nation that the bank and its employees have been asked to become more enterprising to come out of the previous style of banking and offer modern services to the clients.

Cabinet Secretary Ali Imam Majumder, Bangladesh Bank Governor Dr Salehuddin Ahmed, Deputy Governor Nazrul Huda, senior officials from the Ministry of Finance, the central bank and Sonali Bank Managing Director and Deputy Managing Directors were present at the meeting.

"The performance did not deteriorate from the status the bank had at the time of corporatisation," the Finance Adviser told reporters after the meeting. "The bank has the scope to improve (the performance) further," he said.

Replying to a question, Dr Aziz said the bank would have to improve its services and financial performance further. "It could fulfill some of the indicators, but not some others."

He said Sonali Bank could not improve the sorry state of non-performing loans, as the state-owned enterprises did not pay

their money back while they failed to recover some default loans due to cases.

Deputy Governor Nazrul Huda, who is also the head of the Working Group on Restructuring of SCBs, in a recent meeting reviewed the default loan recovery targets of the banks and termed their performance 'unsatisfactory.'

According to the review, the SCBs could only reduce a fraction of the non-performing loans set by the central bank committee for the April-June quarter, while fresh loans have become classified during the period, pushing up the total bad loans.

The non-performing loans of Janata Bank, the second largest state-owned commercial bank, stood at Tk 1,965 crore until June this year, while the non-performing loans of Agrani Bank, the third largest state-owned commercial bank, which is still in red, stood at Tk 2,992 crore up to June this year.