SoEs owe Tk 30,000cr to banks

30 March 2014 Kazi Zahidul Hasan

The public banks are reeling under deep trouble owing to a big amount of outstanding loans from the loss making state-owned enterprises (SoEs), official sources said on Saturday.
Officials of the state-owned banks said the loans have been provided to SoEs as the inherited culture of 'spoon feeding' following instruction from the concerned ministry.
According to a latest data of Bangladesh Bank (BB), the total outstanding loans of 38 state-owned enterprises (SoEs) to the public banks reached near about Tk 30,000 crore as on January this year.
Of the total liabilities, the public entities owed Tk 15,700 crore to Sonali Bank, Tk 7,287 crore to Janata Bank, Tk 4,155 crore to Agrani Bank, Tk 2,906 crore to Rupali Bank and Tk 788 crore to Basic Bank.
Until January 31, this year, an amount of Tk 9,111 crore was rated as classified loans of the SoEs that they owed to the state-owned commercial banks (SCBs).    
The statistics shows that in terms of SoEs outstanding loans, the Bangladesh Petroleum Corporation (BPC) tops the list with Tk 10,800 crore  followed by Bangladesh Power Development Board (BPDB) with Tk 6,572 crore, Bangladesh Chemical and Industries Corporation (BCIC) with Tk 3,952 crore, Bangladesh Sugar and Food Industries Corporation (BSFIC) with Tk 2,834 crore and Bangladesh Oil and Gas Mining Company (BOGMC) with Tk 1,520 crore.
A senior Sonali Bank official, on condition on anonymity, told The New Nation yesterday that the bank is reeling under deep trouble owing to a big chunk of outstanding loans with the loss making public enterprises.
Out of Tk 30,000 the SoEs owed half of the amount to Sonali Bank, he added.
"The outstanding loan is slowing the pace of our business because of liquidity shortage created by stuck up fund with public corporations," he noted.
He said our bank was trying to reduce both the outstanding and classified loans of the SoEs through various steps, but it did not yield positive outcome because of renewal of fresh loans to the SoEs under the finance ministry's instruction.  
The official further said an abnormal credit surge has developed with his bank for funding the import of petroleum products by BPC and support to the BPDP.
"The government cannot afford huge amount of bank liabilities of the public entities in the long run. The economy will face a serious setback if the government fails to scale back their bank exposure," he added.
The Sonali Bank official further said such a huge liability to the state-owned entities forced the public banks to rely deposit collection at higher rates and it later helped to squeeze profitability of the banks.

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