ADR in banks drops below 71pc in DecAKM Zamir Uddin
The credit- or advance-deposit ratio in the banking sector declined to below 71 per cent in December as credit demand in the private sector continued to drop since the second half of the last fiscal year due to dull business situation in the country amid political unrest, said Bangladesh Bank officials.
According to the latest BB data, the overall ADR in the banking sector dropped to 70.80 per cent as of December 19, 2013 from 71.91 per cent as of November 14, 2013.
The ADR was 76.59 per cent as of December 31, 2012 and 80.33 per cent as of June 7, 2012.
The ADR in the banking sector declined in almost every month since the second half of the FY 2012-13 as the majority of the businessmen were reluctant to expand their business by getting credit from banks due to the political unrest, a BB official told New Age on Thursday.
The businessmen adopted a ‘wait and see’ approach in the last few months as they were keeping an eye on the political developments over the general elections, he said.
A significant number of the banks faced loss situation in the concluded year and they will suffer same situation if they see dull ADR also in the months to come, the BB official 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, 71.65 per cent as of September 26, 71.85 per cent as of October 21 and 71.91 per cent as of November 14 last year.
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 the situation changed totally last year as the credit demand from the private sector continued to decrease due to the political unrest in the run up to the national polls held on January 5 this year, the BB official said.
He said that the banks had also taken a cautious policy to sanctioning fresh loans as the banking industry recently faced a number of scams.
The ADR in the banking sector along with its credit growth will decline further in the coming months if the political instability continues, he said.
The BB data showed that the ADR in 26 out of 56 banks declined below 72 per cent as of December 19 last year.
The 26 banks are Sonali Bank (53.13 per cent), Janata Bank (58.98 per cent), Agrani Bank (57.45 per cent), Rupali Bank (58.09 per cent), Pubali Bank (69.93 per cent), Uttara Bank (57.43 per cent), IFIC Bank (71.09 per cent), Prime Bank (68.71 per cent), Dutch-Bangla Bank (69.95 per cent), Bangladesh Commerce Bank (63.70 per cent), Mutual Trust Bank (68.17 per cent), Jamuna Bank (63.58 per cent), NRB Commercial Bank (71.90 per cent), South Bangla Agriculture Bank (67.23 per cent), Meghna Bank (50.70 per cent), Midland Bank (50.87 per cent), Farmers Bank (8.42 per cent), Union Bank (63.65 per cent), NRB Bank (6.52 per cent), Madhumati Bank (1.06 per cent) StanChart (65.24 per cent), Habib Bank (64.80 per cent), State Bank of India (54.88 per cent), Citibank NA (49.16 per cent), Woori Bank (66.20 per cent) and HSBC (59.21 per cent).
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