The contribution of Janata Bank Limited to the country's industrial sector is immense. Most of the large industrial enterprises of the country were born or flourished through the bank. Big conglomerates like Orion, Bashundhara, S Alam, Square, Meghna Group, Beximco, TK Group, Abul Khair, Apex, Akiz Group started their businesses through Janata Bank. Some of which are still in business with this state-owned bank. At present, about 80% of this bank's loans are in the industrial sector.
These were said by Janata Bank Managing Director and Chief Executive Officer Md Abdus Salam Azad in an exclusive interview with The Business Standard Staff Correspondent Sakhawat Prince.
The following is an excerpt from the interview.
How was the time when you joined Janata Bank as MD?
I joined at the beginning of 2018 and was burdened by existing loan irregularities of two big companies (AnonTex and Crescent Group), which had the bank's defaulted loan suddenly jumping from Tk9,000 crore to Tk12,000 crore.
Foreign banks (with which we have credit lines), such as Standard Chartered Bank and Mashreq Bank, used to repeatedly inquire about Janata Bank's condition amid the crisis.
We told them to keep a stronger relationship with us and assured them that we would turn around.
Now every indicator of the bank has improved manifold.
How is Janata Bank's financial performance?
Janata Bank's operating profit was negative in 2018. Next year, we made an operating profit of Tk700 crore. It jumped to over Tk1,400 crore in 2022.
At the same time, the net profit in 2019 was only Tk24 crore, which climbed to Tk310 crore in 2022.
Total deposits in Janata Bank stood at Tk1,01,466 crore at the end of 2022, rising from Tk69,140 crore in 2019.
In addition, the amount of debt in 2019 was Tk54,000 crore and by the end of 2022, it increased to Tk85,000 crore.
Earnings per share (EPS) was Tk1.6 in 2019 which is currently at Tk 13.41.
How has the country's dollar crisis affected Janata Bank?
Despite the dollar crisis, imports and exports through Janata Bank are good. A total of $5 billion worth of goods have been imported through our bank so far this fiscal year (July to March).
Out of this, the government imports value was $4 billion and the rest was private.
Most (80%) of the LCs were opened by government organisations, such as the Rapid Action Battalion, Bangladesh Police, Army, Directorate General of Defence Purchase (DGDP), Bangladesh Petroleum Corporation (BPC), Bangladesh Agricultural Development Corporation (BADC), Petrobangla, and Bangladesh Chemical Industries Corporation (BCIC).
All these LC payments have been settled timely.
Sonali bank limited stopped issuing LCs of RAB and Police because of US sanctions. Janata Bank has come forward and started issuing LCs for these two organisations.
None of our LCs have defaulted in payment when other public banks faced regular LC payment failures.
Export volume via our bank is more than other banks with more than $2 billion worth of goods exported through us this financial year.
What is your role in reducing defaulted loans of Janata Bank?
I came to Janata Bank at a critical moment. My job was to recover the money that exited the bank in any way possible.
Before 2019, we were far behind other nationalised banks, we were top in terms of defaulted loans.
Luckily, we got a very friendly board after 2019.
At one point our non-performing loans (NPL) shot up to 44%. In 2019 it came down to 26%. On April 4 this year, our non-performing loan was at a little over 17%.
In September 2022, our defaulted loan was Tk20,000 crore, which is now Tk14,300 crore.
We are already in the process of recovering some more loans and by June 2023, about Tk1,000 crore of defaulted loans are in the pipeline to return.
Was central bank policy followed to regularise AnonTex?
At a meeting with the central bank, we promised that our NPLs will come down to 14% by June. In the meantime, we have been able to regularise Tk5,000 crores of AnonTex through an interest waiver with a 2% down payment.
All these have been done in full compliance with the central bank's policies and regulations. We can recover double the amount we had loaned to AnonTex. Once done, our risk-weighted asset amount will decrease.
According to the exit policy of the central bank, the time has been given till June to recover the debt of AnonTex. We get one year to waive the interest and expect the loan to be cleared within six months. There is an opportunity to extend the time again if it is not fully paid.
Besides, we collected about Tk13.5 crore from Crescent Group in January this year. Out of Tk3,200 crore, we have regularised Tk700 crore with a maximum 3% down payment.
What are the challenges for the banking sector in the current global economic crisis?
Due to the Russia-Ukraine war, there has been a huge increase in the price of goods in the world market. At the same time, the value of the dollar has increased a lot.
However, inflation in Bangladesh is still 8% when it is over 13% in many developed countries. Many anticipated a crisis of daily essentials during Ramadan but our markets are behaving normally.
The level of crisis I saw in the dollar market in July last year has waned much now. We still have $31 billion in reserves. Over $2 billion in remittance came to Bangladesh in March and more will come in the next few months on the occasion of two Eids.
Moreover, our banking system is still performing well as we are getting back our loans.
How do you see the new Bank Companies Act Amendment (2023)?
We have long wanted the policies that have been placed in the new Bank Companies Act regarding willful defaulting customers.
Besides, the central bank has shown great courage by publishing the list of defaulting borrowers. These defaulters will not be able to hold political posts.
I think the conditions of house and car purchases, and travelling abroad in the law are good aspects. It has brought changes at the director level — it has become modern.
What is the role of Janata Bank in social safety net services?
We are providing 43 services across the country through our social network without cost. For this, we requested the government to provide Tk700 crore per year, through which we will get some capital.
We are charging only Tk0.10 to Tk0.20 commission for opening LCs of BCC, Petrobangla, and ports.
Janata Bank as a state-run bank has the trust of the prime minister. I am working to keep that trust intact in the coming days.