Banks’ NPLs likely to swell further in next quarters

The volume of non-performing loans (NPLs) in the country’s banking sector might even grow bigger at the end of the current quarter (July-September), some senior bankers have expressed the fear. The bankers have a feeling that some borrowers would default on repayments against both rescheduled and restructured large loans during the remaining quarters of the current calendar year. The senior banker’s observations came in the wake of the NPL amounts having risen by more than 23.0% or BDT 120.0 billion in the first half (H1) of the current calendar year. The volume of non-performing loans (NPLs) rose to BDT 633.7 billion as on June 30 last from BDT 513.7 billion as on December 2015. It was BDT 525.2 billion a year before. Most of the restructured large loans’ repayments are scheduled to start in the third quarter of this calendar year at the end of the one-year grace period, according to a BB senior official. Most of the proposals on large loan restructuring were approved between July and August last year (2015), he explained. The central bank earlier had cleared proposals of 10 business groups for the restructuring of their large loans worth BDT 140.5 billion. A total of 22 commercial banks had earlier forwarded the proposals to the BB for approving loan restructuring on behalf of their clients. The share of classified loans also rose to 10.1% of the total outstanding loans during the period under review from 8.8% six months before.

Source: http://print.thefinancialexpress-bd.com/2016/08/25/150094

Seven banks face BDT 62.3 billion provision shortfall

Seven banks including scam-hit BASIC and Sonali banks faced a provision shortfall of BDT 62.3 billion against their general and defaulted loans as of June 30, 2016. The shortfall was BDT 53.5 billion as of December 31, 2015. The other five banks which failed to keep required provision are Rupali Bank, Bangladesh Commerce Bank, National Bank, Premier Bank and Bangladesh Krishi Bank. As of June 30, 2016, provision shortfall of BASIC Bank increased to BDT 36.5 billion from a shortfall of BDT 33.1 billion as on December 31, 2015, that of Rupali Bank rose to BDT 7.8 billion from a zero-shortfall and that of Bangladesh Commerce Bank increased to BDT 2.5 billion from a shortfall of BDT 2.2 billion. The provision shortfall of Sonali Bank stood at BDT 10.9 billion as of June 30, 2016 against a shortfall of BDT 16.7 billion as of December 31, 2015. Provision shortfall of National Bank decreased to BDT 892.1 million from BDT 1.5 billion in deficit, that of Premier Bank increased to BDT 1.8 billion from a zero-deficit and that of Bangladesh Krish Bank stood at BDT 2.0 billion from a surplus amount of BDT 1.9 billion six months ago. The overall provision shortfall in the banking sector also increased to BDT 44.5 billion as of June 30, 2016 from that of BDT 42.8 billion as of December 31, 2015, the BB data showed.

Source: http://newagebd.net/248203/7-banks-face-BDT -6233cr-provision-shortfall/

State-run banks hold BDT 358.9 billion defaulted loans

The eight state-run banks held 56.6% or BDT 358.9 billion of the total defaulted loans in the banking sector as of June 30, 2016 as they disbursed huge amount of loans to their clients violating rules, said officials of Bangladesh Bank and an expert. Four out of the eight banks also failed to keep required provision against their disbursed loans and advances after the end of June, 2016. The eight banks are: Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, BASIC Bank and Bangladesh Development Bank. The total classified loans were BDT 633.7 billion in the country’s banking sector as of June 30, 2016. A BB official told New Age on Wednesday that the defaulted loans in the banking sector including that in the state-run banks had earlier declined significantly in 2014 and 2015 as most of the banks rescheduled their defaulted loans by managing no-objection certificates from the central bank. But, the rescheduled loans again entered in the defaulted zone that fuelled the non-performing loans in the state-run banks. The defaulted loans and written-off loans together in the eight state-run banks stood at BDT 579.7 billion at the end of the first half (January-June) of 2016. The eight state-run banks wrote off uncollectible loans amounting to BDT 220.8 billion as of March 31, 2016. Banks are allowed to write off loans when those become defaulted loans of bad or loss category.

Source: http://newagebd.net/248623/state-run-banks-hold-BDT -35894cr-defaulted-loans/

Bangladesh Bank to ask banks on steps taken to reduce NPLs

The central bank is set to ask banks, having more than 5.0% classified loans on total outstanding, to inform about their initiatives for reducing the volume of such loans, officials said. As per the decision, the Bangladesh Bank (BB) is going to send letters to 30 banks out of 56 next week in this connection. Besides, the central bank, in its letter, will come to know from the banks concerned about increased trend of non-performing loans (NPLs) in the second quarter (Q2) of the current calendar year. The BB’s latest move came in the wake of the NPL amount having risen by more than 23% or BDT 120 billion in the first half (H1) of the current calendar year. The volume of classified loans rose to BDT 633.65 billion as on June 30 last from BDT 513.7 billion as on December 2015. It was BDT 525.2 billion a year before. Six state-owned commercial banks (SoCBs), 18 private commercial banks (PCBs), four foreign commercial banks (FCBs) and two specialised banks (SBs) are on the list of those having over 5.0% NPLs on their total outstanding loans. Among the banks, a FCB has 88.8% classified loan on total outstanding during the period under review while 76.4% NPL with a PCB, according to the central bank’s confidential report.

Source: http://print.thefinancialexpress-bd.com/2016/08/26/150217

Banks often troubled by influential defaulters

Influential defaulters took advantage of the loan rescheduling policy repeatedly, Bangladesh Institute of Bank Management or BIBM said in a study. BIBM prepared the report, ‘Implication of Loan Rescheduling and Write-off on the Performance of Banks’, early this month after analyzing data from 2010 to 2014 and recording statements of bankers. The government, judicial authority, the central bank, law enforcement agencies, political parties, trade associations and the media should work to restrain bad borrowers from unethical practices, it said. The rescheduling of delinquent loans is actually a deferral process of accumulating default loans. The move puts immense pressure on the bank’s capacity to recover the loans, which are not only “toxic assets” but will go on to become irrecoverable in the long run. Banks on average rescheduled BDT 10,909 crore a year between 2010 and 2014, according to the BIBM study. In 2015, banks rescheduled BDT 263.1 billion in bad loans, which is 50.1% more than in 2014, as per central bank statistics. Besides, under pressure from influential businessmen, the central bank last year offered a special restructuring opportunity for loans upwards of BDT 5.0 billion. Under the facility, BDT 164.1 billion was restructured in loans. The loans were already rescheduled and restructured several times. The study shows that the recovery of rescheduled loans is small and realization of funds from large borrowers even smaller. It seems that banks always try to facilitate large loans or large composite loans, allowing multiple rescheduling for a longer period with negligible down-payment, interest blocking, extension of fresh loans to sister concerns, according to the study findings.

Source: http://www.thedailystar.net/business/banks-often-troubled-influential-defaulters-1276690

BSEC forms probe body on Summit Power issue

The securities regulator has formed a four-member committee to probe whether the High Court’s order was followed properly in completing the amalgamation process of the listed company Summit Power. The Bangladesh Securities and Exchange Commission (BSEC) issued an administrative order on formation of the probe body on Friday night. The BSEC body, led by executive director Mahbubul Alam, will submit the report in 15 working days. Both the stock exchanges will hold emergency meetings on the issue today (Saturday). Both the bourses Wednesday suspended share trading of Summit Power due to non-compliance with completion of the company’s amalgamation process.

Source:
http://print.thefinancialexpress-bd.com/2016/08/27/150281
http://www.dhakatribune.com/business/2016/08/26/summit-powers-share-trading-suspended-sine-die/
http://newagebd.net/248404/bourses-troubled-water-summits-co-delisting-fiasco/
http://newagebd.net/248615/bsec-forms-body-investigate-sppcl-delisting/
http://www.dhakatribune.com/business/2016/08/28/bsec-dse-open-seperate-probes-merger-process-summit-power/
http://newagebd.net/248794/sppcl-delisting/

BDT 300.0 million of 2 delisted MFs remains undistributed for 5 months

Funds worth around BDT 300.0 million of two closed mutual funds still remain undistributed even after five months of their delisting from the stock exchanges after their tenure expired over tax complexity. Investors do not know whether or when they will get the remaining amount of the mutual funds. The mutual funds — Grameen One: First Scheme of Grameen Mutual Fund One and AIMS First Guaranteed Mutual Fund — which were managed by AIMS of Bangladesh were delisted from the Dhaka and Chittagong stock exchanges on March 2, 2016. The Bangladesh Securities and Exchange Commission on May 4 approved the financial statements of the funds with a number of observations from the auditor asking the trustee of the MFs to pay unit holders’ funds within seven working days. The Bangladesh Securities and Exchange Commission recently sought a number of clarifications from the sponsors, asset managers and auditors of the two closed MFs which were operated by AIMS of Bangladesh regarding the objections raised by the auditor. A BSEC letter issued on August 8 asked the asset manager to submit year-wise detail unsettled Tax and VAT liabilities of the funds, if any, for the previous year rather than the last financial statement that was not paid by or collected from the beneficiaries. The commission in its letter also asked the AMC to provide day-wise sales or encashment details of assets, it said. The BSEC letter asked the parties to reply within ten working days of receiving the letter. AIMS First Guaranteed Mutual Fund, a BDT 90-crore fund in terms of issue price, was enlisted with the stock exchanges in 2000, while Grameen Mutual Fund One, a BDT 41.61-crore fund, was enlisted with the bourses in 2005.

Source: http://newagebd.net/248618/BDT -30cr-2-delisted-mfs-remains-undistributed-5-months/

Ex-directors of People’s Leasing move to repay loans amid pressure

Five directors of People’s Leasing and Financial Services, who were removed from the board last year for taking loans of about BDT 400 crore from the company breaching rules, have now moved to pay back the loans to avoid arrests. According to Bangladesh Bank rules, directors of banks and financial institutions or their family members cannot take loans from their own companies. Panic gripped the directors, especially after the Anti-Corruption Commission arrested Khabir Uddin Miah, one of the five directors, a few days ago. Pranab Kumar Bhattacharya, a spokesman of ACC, confirmed that two persons, including Miah, have been arrested on the basis of a case filed by the anti-corruption watchdog. “Some of these directors have contacted us to settle their loans. One has already offered to pay back BDT 100 crore and we have sent the proposal to the central bank for its approval,” said Sami Huda, acting managing director of the financial institution. Bangladesh Bank detected the irregularities in September 2014 and suggested the company remove the directors and file cases against them to recover the funds misappropriated between 2002 and 2014. Though the accused were removed from the board, no cases were filed. Then chairman M Moazzam Hossain claimed he was not removed, he resigned himself.

Source: http://www.thedailystar.net/business/ex-directors-peoples-leasing-move-repay-loans-amid-pressure-1276684