4 SCBs must focus on SME sector to avoid risky loans

Bangladesh Bank is going to include SME loan disbursement target as a clause in memorandums of understanding signed with the four state-owned commercial banks.
A BB official told New Age on Wednesday that the central bank had taken the plan so that the four banks — Sonali, Janata, Agrani and Rupali — would have to disburse maximum loan to small and medium enterprises avoiding risky large-scale loans.
The four banks faced huge amount of non-performing loans in the recent years as their large-scale loans plunged in the defaulted category.
The central bank’s initiative will help the four banks reduce the defaulted loans, said the official.
As part of the move, the BB issued a letter to managing directors and chief executive officers of the banks on May 30 asking them to submit SME loan disbursement target in the shortest possible time to the central
bank to prepare the MoUs for the current calendar year.
Under the MoUs, the BB used to set a target of recovering the defaulted loans, decreasing the loss-making branches and strengthening the capital position for the four banks in every year.
The BB official said the central bank had been setting a credit growth target for the banks for the last few years to curb their aggressive lending.
The BB will attach the SME loan disbursement target with the credit growth ceiling of the four banks.
The four banks earlier placed the SME loan disbursement target to the BB for this year, but the target may be changed due to the central bank’s initiative, under which the BB will have a role in setting the target.
Sonali Bank set an SME loan disbursement target of Tk 1,973 crore for this year, that of Janata Bank Tk 4,197 crore, that of Agrani Bank 2,564 crore and that of Rupali Bank 400 crore.
Sonali Bank set an SME loan disbursement target of Tk 1,973 crore for this year while Tk 4,197 crore was set for Janata Bank, 2,564 crore for Agrani Bank and 400 crore for Rupali Bank.
The BB set a credit growth target at 6 per cent for Sonali Bank, 10 per cent for each Janata Bank and Agrani Bank and 12 per cent for Rupali Bank in 2015.
The BB, however, is yet to set the credit growth target for the banks.

News Courtesy: www.newagebd.net