The New Nation - Internet Edition

BUSINESS REPORT

The classified loans amount of state-owned enterprises to four state-run commercial banks stood at around Tk 1512 crore till August 31, 2008, up by about Tk 220 crore from its figure in three months back, sources in the banking sector said.

The SoEs owe the highest amount of Tk 819.68 crore to Sonali Bank, followed by Tk 428.10 crore to Rupali Bank, Tk 247.51 crore to Agrani Bank and Tk 15.88 crore to Janata Bank in August, 2008, according to the latest figures compiled by the Bangladesh Bank.

The public sector entities owed Tk 1292 crore to the four state-owned lenders up to May 31st, 2008. Of the amount, the SoEs owed the highest amount of Tk 602.24 crore to Sonali Bank, followed by Tk 429.28 crore to Rupali Bank, Tk 248.57 crore to Agrani Bank and Tk 10.94 crore to Janata Bank, according to the figures compiled by the Bangladesh Bank.

Providing guarantee from the finance ministry in issuing loans to the financially ailing state-owned enterprises is a main cause for stockpiling of huge bad loans in the state-owned banks, bankers observed.

'Sometimes, we become compelled to issue loans to state-owned enterprises, which suffer from shortage in their working capital or cash to pay salaries to their employees,' a chief executive officer of a state-owned bank told The New Nation.

'While providing loans to the SoEs, on many occasions the matter of feasibility of return of the loans had to forgo due to the status of the enterprises,' he added.

An executive of Sonali Bank said the finance ministry on many occasions gave guarantee for re-payment of the loan money in favour of the SoEs.

As per the latest figure, Bangladesh Jute Mills Corporation alone accounted for about Tk 902.79 crore or 60 per cent of the total classified loans amount followed by Bangladesh Textile Mills Corporation for Tk 235.99 crore, Bangladesh Chemical Industries Corporation for Tk 89.87 crore, Bangladesh Agriculture Development Corporation for Tk 21.27 crore, Bangladesh Shipping Corporation for Tk 8.33 crore, BFFWT for Tk 12.09 crore and BTB for Tk 10.90 crore.

The boards of directors of three corporatised banks - Sonali, Janata and Agrani - are expected to take serious steps in lending to SoEs, considering their unsatisfactory performance as clients, sources said.

'We will raise the issue to the finance ministry to solve the problems immediately,' the chairman of a corporatised state-bank told The New Nation.

'We are ready to disburse agriculture loans among farmers on lower interest rates, but we can no longer afford to lend money to the SoEs to increase our bad debt burden more.'