Siddique Islam

Two leading state-owned commercial banks (SCBs) - Sonali and Janata - are moving forward under the leadership of two career bankers in achieving their goals, banks' officials said.

The SCBs have already been able to improve major indicators, including recovery of the classified loans, increasing the amount of operating profits, minimising the number of loss-making branches and introduction of information and communication technology (ICT) to provide better services to their clients.

"We've already achieved the targets given in the contract for 2008. We're trying to improve our service standards through introduction of on-line banking," Chief Executive Officer (CEO) and Managing Director of the Sonali Bank Limited S.A. Chowdhury told the FE Wednesday.

He also said the Sonali Bank Limited has taken measures to reduce the amount of non-performing loans (NPLs) through strengthening supervision and monitoring across the country.

"We've already appointed seven recovery agents to facilitate the ongoing recovery drive of the NPLs," Mr. Chowdhury said, adding: "We expect that the overall performance of the bank will be satisfactory by the end of this year despite the ongoing global meltdown."

The percentage of classified loan came down to 31 per cent in 2008 from 45 per cent of the previous year, according to the bank statistics.

"We are hopeful about such loans going down to 25 per cent by the end of this year," a senior official of the Sonali Bank said, adding that the bank is going to introduce Islamic banking shortly.

The leading SCB has decided to introduce Islami banking in five branches -- one each in Dhaka, Chittagong, Sylhet, Khulna and Bogra initially, according to the official.

He also said Sharia Council has already been formed to run the Islamic branches properly. The first meeting of the Council will be held on July 6 this year, he added.

"We are going to introduce the merchant banking from July 15 as part of our business expansion plans," the Sonali Bank official said, adding that two schemes for non-resident Bangladeshis (NRBs) were lunched Wednesday to facilitate sending more money by them back home.

"The present management team under the leadership of the CEO, has been trying to change the mind-set of its manpower to transform them into an efficient forces," the official noted.

The authorities of Janata Bank Limited, the country's second largest SCB, have also been effective in improving their service standards, using different mechanisms like speedy remittance delivery system among its 200 branches out of 850. The bank has already witnessed a turnaround in all its performance indicators under the leadership of its CEO. The Board of Directors has also extended all cooperation in this respect, sources said.

The Janata Bank has furthermore decided to introduce Islamic banking by the end of August this year, a senior official of the bank said, adding that the bank has already lunched the merchant banking operation aiming to bring about a dynamism in the country's capital market. "Such steps are showing a positive outcome for the operational performance of the bank, the sources added.

"Our services were hired to help achieve the major indicators under the terms of the contact. Profitability, reduction of classified loans and better deployment of funds through proper selection of clients, have been achieved," Chief Executive Officer (CEO) and Managing Director of the Janata Bank Limited S.M. Aminur Rahman told the FE.

The percentage of classified loan came down to 10.92 per cent in 2008 from 23 per cent of the previous year, according to the bank statistics.

A World Bank mission team visited the Janata Bank recently to evaluate the performance of 2008 and observed that Janata Bank has been most successful in its debt recovery.

"The NPL as a percentage of the total outstanding loans is now in line with the banking sector average of 10.7 per cent," the World Bank mission said in its observation.

The Janata Bank has registered a robust growth of good loans and shown its strongest improvement in profitability, the mission said, adding that the net worth of the bank has continued to improve.

"Actual provisioning was higher than the required provisioning in 2008. The bank also made its computerisation target and disclosure requirement fully," it added.

The number of loss-making branches of the Janata Bank dropped to 96 in 2008 from 149 of the previous year while such branches of Sonali Bank came down to 191 in 2008 from 439 one year back.

The Sonali Bank earned Tk 6.41 billion as operating profit in 2008 against Tk 5.60 billion of the previous year while the Janata Bank bagged Tk 7.01 billion as operating profit against Tk 4.96 billion one year back.