Government's prudent decision imposing ceiling on interest rates helped financial institutions and other entities navigate safely the covid-induced shocks, says the finance minister about the 9-6 bracket.
Speaking at a function Thursday in Dhaka, AHM Mustafa Kamal mentioned that the government few years ago had fixed the capping of interest rates-ranging between 18 per cent and 20 per cent-considering the country's competitiveness in the region and elsewhere.
"There were no other countries in the world having such higher rate. If we did not fix the capping, it would have been very hard to find existence of any entity. So, the decision is proven fruitful," Mr Kamal told his audience at the golden jubilee and annual conference of Sonali Bank Limited.
Founded on March 24, 1972 by independence leader Bangabandhu Sheikh Mujibur Rahman, Sonali Bank is the largest state-owned commercial bank in terms of branches, networks and clienteles.
Giving some statistics of improvements in the banking sector, the finance minister said the lending rate in the scheduled banks came down to 7.1 per cent from 13.3 per cent over the last 12 years.
The share of NPL (non-performing loan) was 13.2 per cent in the banking system in 2006 when the volume of advances was Tk 1.53 trillion.
"It (NPL) was reduced to 8.10 per cent when the advances rose Tk 12.85 trillion," says the present custodian of exchequer.
Citing various government initiatives to protect the financial institutions, he notes that the financial strengths of the banks keep improving.
In 2020, the banks made profit worth Tk 52.79 billion despite the pandemic upset. In the first six months of 2021, the profit figure was Tk 41.46 billion.
"The banking sector has been performing much better compared to other countries of the world," he says.
Talking about the Sonali Bank that went through many challenges like massive loan scams, Mr Kamal observed that there has been no such need for recapitalisation by government for the bank over the last few years, which is a tremendous achievement. "The bank is now in a better position compared to other banks."
Speaking as a special guest, governor of Bangladesh Bank (BB) Fazle Kabir recommended for the Sonali Bank management to further reduce the loan-processing timeframe, increase non-funded business, reduce the number of loss-incurring branches to zero intensifying focus on CMSME sector. Talking about NPL of the bank, he said the share of its bad loan declined to 17.76 per cent in 2021 from 40.85 per cent recorded in 2000.
Finance division senior secretary Abdur Rouf Talukder gave three suggestions to the management of the bank: lessen the volume of NPL, automate it completely and develop research and development bringing more financial innovations.
Former BB governor Dr Atiur Rahman hailed SBL contributions to removing bank fear among people in the remote areas.
He suggests paying more focus on building skilled and technology-savvy human resources. He also calls upon all to be alert so that no one could make a fracture in the confidence of the banking sector.
Chief executive officer and managing director of Sonali Bank Ataur Rahman Prodhan described performance of the bank in the country's socioeconomic development.
He mentioned that they had carried out their services even in the peak time of COVID-19 pandemic considering need of people.
"We lost 33 staff members of the bank owing to the viral disease and many others were infected but survived," he says about the ordeals humanity at large also endured and goes on grappling with the fallout.
He said the bank was now focusing more on IT-related activities. According to official figure, the volume of deposit portfolio of the bank was over Tk 1.33 trillion and the loan and advance were worth more than Tk 690 billion while the profit figure was Tk 20.85 billion in 2021.
