The central bank has asked the nationalised commercial banks to improve their financial health and performances as their bad debt portfolio continues to mount.

Bangladesh Bank governor Salehuddin Ahmed, while reviewing the state of Sonali, Janata, Agrani and Rupali banks at a meeting, expressed concern about soaring classified loans and instructed the banks to reduce them to a tolerable level, said a central bank official.

The total classified loans of the four state-owned lenders increased to Tk 13,058.24 at the end of June from Tk 11,503.61 crore in December 2006.

Total classified loan in the banking sector grew to Tk 22,302 crore from Tk 20,098 crore during the period.

Classified loans of private commercial banks went up by Tk 784.83 crore to Tk 5,150 crore, foreign commercial banks by Tk 76.18 crore to Tk 160.03 crore. However, development financial institutions managed to reduce its classified loans by Tk 211.72 crore to Tk 3,933.16 crore.

The Monday’s meeting attended by managing directors of the state-owned banks discussed the banks’ recovery performance especially from the top 20 defaulters.

Top executives of the banks said they filed cases against a number of defaulters and pursued amicably out of court settlements with many borrowers who defaulted on loan payments.

Capital shortfall of NCBs went up to Tk 6,866.07 crore in June compared with Tk 6633.7 crore in December, according to the central bank figure.

The total advances of the banks went down in six months period to Tk 49,942.6 crore in June from Tk 50,156.55 crore in December.

The International Monetary Fund said private sector credit growth slowed to 15 per cent as of June due to uncertainty and eroding business confidence. As a result, banks are wallowing in excess liquidity, raising risks for further inflationary pressures, bankers warned.

Deposit of NCBs grew by Tk 2302.16 crore to Tk 70419.8 crore in six months till June.

The four state-owned banks wrote off Tk 4,279 crore up to June against Tk 4090.53 crore in December.

The five specialised banks deleted Tk 3,011 crore from their balance sheets while 30 private commercial banks wrote off Tk 4552 crore loans and nine foreign commercial banks Tk 160 crore up to June, said the central bank figure.

Agrani Bank wrote off the highest amount of Tk 1441 crore, Janata Tk 1127 crore, Sonali Tk 1094 crore and Rupali Tk 615 crore.

In the PCBs, National Bank wrote off Tk 895 while IFIC deducted Tk 800 crore from books.

The banks can write off loans which are classified for two years with 100 per cent provision and they must pursue for realising those loans.