The state-owned banks are in a precarious condition with Janata Bank in a desperate condition due to corruption and irregularities. Other banks, Sonali, Rupali, Janata, Agrani, Basic, BDBL are also facing the crisis. What is alarming is that such problems are having a contagion effect and spreading to private banks.
Several banks are having to borrow money or use up their capital to carry day to day operations.
Central Bank says, there is an example of borrowing Tk 60 billion daily from the inter-bank currency market. Analysis of last one week’s information shows that on Sunday (May 26) banks took a loan of Tk 56.69 billion from the inter-bank currency market. This was followed by loans of Tk 66.08 billion on Monday, Tk. 71.74 billion on Tuesday, Tk. 6954 crore on Wednesday and Tk 55 billion on Thursday.
On Wednesday last, Bangladesh Bank gave Tk. 2.87 billion as liquidity support to three banks.
As per information of Bangladesh Bank, more than 30 banks are operating on borrowed money; about a dozen banks are sustaining on their capital.
In 2018, the net profit of banks was Tk 40.40 billion, which is 57 percent lower than the previous year. In 2017, the net profit was Tk 95.10 billion. Bangladesh Bank report states that default loan of banks has risen due to inept asset management.
Dhaka Bank’s MD, Syed Mahbubur Rahman, says: “Banks faced a liquidity crisis all throughout 2018 and therefore, the fund management cost has seen a rise; in addition, default loan also rose last year.”
Sonali Bank’s net profit in 2017 was Tk 7.09 billion which came down to Tk 2.26 billion in 2018, Janata made Tk 2.68 billion as profit in 2017 and, the next year (2018) it was Tk 250 million.
Agrani made a profit of Tk 6.76 billion in 2017 which came down to Tk 1.03 billion.
As per the central bank, the default loan of banks stands at Tk 1.58 trillion.
Bangladesh Bank governor, Salehuddin Ahmed, said: “Until there is proper governance in the sector, a defaulted loan will continue to rise.”
The additional liquidity of banks in March 2018 was Tk 768.88 billion whereas the next year it was Tk 639.21 billion.