The government’s finance authority has issued a stern directive to state-owned commercial banks (SoCBs) to implement “strong measures” to address the escalating issue of classified loans, which are severely impacting the sector’s overall financial health. 

This directive follows a comprehensive review by the Financial Institutions Division (FID) under the Ministry of Finance, which assessed key economic data for public-sector banks up to March 2024.

The review highlighted significant concerns regarding the performance of SoCBs, particularly regarding the increasing volume of classified loans. BASIC Bank Limited was identified as having the highest percentage of classified loans at 63%, up from 57.23% in the previous year. This troubling trend is evident across several major state-owned banks:

Bangladesh Development Bank PLC (BDBP) saw a reduction in classified loans to 33.97% from 42.41% the previous year.

Janata Bank PLC experienced a dramatic rise in classified loans to 31%, almost doubling from 16% the year before, with the total classified loans reaching Tk 304.95 billion—the highest among the SoCBs.

Agrani Bank PLC reported a rise in classified loans to 28%, amounting to Tk 208.64 billion, up from 20% or Tk 148.06 billion the previous year.

Rupali Bank PLC managed to reduce its classified loans slightly to 21%, amounting to Tk 103.57 billion, from 23% the previous year.

Sonali Bank PLC saw an increase in classified loans to 14.84%, with the amount rising to Tk 149.88 billion from 13.57% or Tk 120.67 billion the previous year.

The FID secretary chaired the meeting and also reviewed the deteriorating capital base of most SoCBs. Notable increases in capital shortages were observed:

Janata Bank’s capital shortage surged to Tk 164.47 billion in December 2023 from Tk 92.63 billion the previous year. Agrani Bank’s capital shortage rose to Tk 126.98 billion from Tk 101.55 billion. Rupali Bank’s capital shortage increased to Tk 65.21 billion from Tk 64.27 billion. BASIC Bank’s capital shortage climbed to Tk 74.53 billion from Tk 64.01 billion.

While Sonali Bank managed to post a significant net profit of Tk 6.51 billion in 2023, up from Tk 3.71 billion in 2022, other SoCBs saw notable declines in their net profits:

Janata Bank reported a halving of net profit to Tk 550 million in 2023, down from Tk 1.13 billion in 2022 and Tk 3.0 billion in 2021. Agrani Bank’s net profit shrank to Tk 690 million from Tk 1.11 billion. Rupali Bank recorded a net profit of Tk 543.5 million, up from Tk 209.30 million. BASIC Bank’s net loss swelled significantly to Tk 4.35 billion from Tk 1.30 billion the previous year.