Bank business hit hard by political unrest
ADR in 32 banks drops below 75pcAKM Zamir Uddin
The credit- or advance-deposit ratio in 32 scheduled banks dropped below 75 per cent in mid-November as credit demand in the private sector continued to drop due to dull business situation in the country amid political unrest, said officials of Bangladesh Bank.
According to the latest BB data released on Thursday, the overall ADR in the banking sector dropped to 71.91 per cent as of November 14 from 76.59 per cent as of December 31, 2012. The ADR was 80.33 per cent as of June 7, 2012.
The ADR in the banking sector declined in every month since the second half of the FY13 as the majority of the businessmen have been reluctant to expand their business by getting credit from banks due to the existing political unrest, a BB official told New Age on Thursday.
The businessmen have adopted a ‘wait and see’ approach in the last few months as they are keeping an eye on the political developments in the run up to the next general elections, he said.
The majority of the banks will fall deep into loss situation in this year like the previous year as they faced a dull ADR in 2013, he said.
The BB data showed that the ADR in the banking sector was 76.95 per cent as of January 10, 76.28 per cent as of February 7, 75.28 per cent as of March 14, 75.26 per cent as of April 25, 74.90 per cent as of May 2, 74.01 per cent as of June 13, 73.35 per cent as of July 11, 73.34 per cent as of August 1, and 71.65 per cent as of September 26 and 71.85 per cent as of October 21 of this year.
The BB data showed that the ADR in 32 out of 54 banks (excluding two new banks) declined below 75 per cent as of November 14 of this year. The two new banks — NRB Global Bank and Madhumati Bank — are yet to start loan disbursement.
The 32 banks, which ADR dropped below 75 per cent in mid-November, are: Sonali Bank (53.68 per cent), Janata Bank (61.16 per cent), Agrani Bank (61.52 per cent), Rupali Bank (59.56 per cent), Pubali Bank (72.09 per cent), Uttara Bank (58.71 per cent), IFIC Bank (73.07 per cent), Prime Bank (69.67 per cent), Southeast Bank (74.20 per cent), Dutch-Bangla Bank (72.42 per cent), Mercantile Bank (73.41 per cent), Bangladesh Commerce Bank (65.12 per cent), Mutual Trust Bank (70.72 per cent), Trust Bank (74.38 per cent), Jumana Bank (65.67 per cent), NRB Commercial Bank (62.52 per cent), South Bangla Agriculture Bank (65.92 per cent), Meghna Bank (41.55 per cent), Midland Bank (48.06 per cent), Farmers Bank (7.99 per cent), Union Bank (62.22 per cent), NRB Bank (5.32 per cent), StanChart (63.39 per cent), Habib Bank (68.69 per cent), State Bank of India (53.97 per cent), Commercial Bank Ceylon (72.84 per cent), Citibank NA (36.55 per cent), Woori Bank (61.10 per cent), HSBC (64.26 per cent), Bank Al Falah (74.47 per cent), Bangladesh Krishi Bank (74.45 per cent), and Bangladesh Development Bank (74.26 per cent0.
As per the BB rules, the conventional commercial banks are not allowed to invest more than 85 per cent of their deposits while Islamic banks and Islamic wings of the conventional commercial banks can invest up to 90 per cent of their deposits.
A number of banks had crossed the ADR limit in 2011 and 2012, violating the BB rules but now the situation has changed totally as the credit demand from the private sector continued to decrease due to the ongoing political unrest, the BB official said.
The ADR in the banking sector along with its credit growth will decline further in the coming months if the ongoing political instability continues, he said.
Under the circumstances, the private sector credit growth declined to 11.04 per cent in October 2013 compared with that of 20.60 per cent in the corresponding month of last year.
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