100 defaulters owe Tk7,800cr to Rupali Bank

Around 78% of default loans in Rupali Bank are concentrated on its top 100 borrowers, making the state-owned bank's financial stability and profitability at risk.

Under the directives of the central bank, senior executives of Rupali Bank have been assigned target-oriented tasks to retrieve these loans, amounting to nearly Tk7,800 crore, according to the bank's Chief Executive Officer (CEO) Mohammad Jahangir.

One of the conditions for the government in taking a $4.7 billion loan from the International Monetary Fund (IMF) is to reduce the defaulted loans of state-owned banks.

That is why, the Bangladesh Bank has ordered the state-owned Sonali, Janata, Agrani and Rupali banks to bring down the amount of defaulted loans to 12% of the total disbursed loans by the end of June.

According to a Rupali Bank report, the total amount of the bank's default loans stood at Tk10,580 crore at the end of April 2023 and Tk7,794 crore of this massive default loan is stuck with 100 big borrowers.

Mohammad Jahangir, also the managing director of Rupali Bank, told The Business Standard, "Due to the global crisis, the bank's defaulted loans have increased slightly. However, we have taken various initiatives to contain it. A debt collection committee consisting of bank officials has been formed. I myself am regularly monitoring the collection of default loans with the help of the board of directors.

"Hopefully, as a result of intensive monitoring, the number of bad loans will definitely decrease. Moreover, the bank is providing all kinds of facilities to the businessmen so that they can pay back the money to the bank by doing business."

Other documents of Rupali Bank revealed that the bank's default loans stood at Tk6,630 crore at the end of December 2022.

According to Bangladesh Bank data, the amount of defaulted loans of the bank stood at Tk7,585 crore at the end of March, which is 18.41% of the total disbursed loans. At the end of April, the default amount rose to over Tk10,000 crore.

An official of the Bangladesh Bank, wishing not to be named, told TBS that banks give more importance to the disbursement of large loans than small ones. Because of this, when the loan defaults, a large amount of the loan is stuck with a few institutions or businesses. When big borrowers default, these loans are hard to recover.

"First, big borrowers have the power to influence the bank's board of directors. These borrowers withhold the bank's money by filing writs in the money loan court. Banks are required to maintain higher security reserves if big borrowers default. Besides, a lot of money is spent on loan cases," the central bank official added.

Will the plan to recover bad loans work?

To recover the loans in the quickest way possible, the Rupali Bank authorities have given special tasks to more than 50 officials (deputy general manager and assistant general manager level) of the head office to collect the due amounts from these top defaulters. Two-official teams were formed to retrieve debts from three defaulters.

Rupali Bank announced an action plan at the beginning of this year to bring down the rate of non-performing loans (NPLs) to single digits through cash collection and consolidation or regularisation of loans.

According to that action plan, all officials of the bank will try their best to increase recovery from top defaulters. Besides, the bank will follow the Early Alert System so that no new loan defaults. But all of these initiatives remain on paper because NPLs increased further.