INTERVIEW: Agrani Bank suspends new lending till Dec

Agrani Bank has decided to suspend fresh loan approvals till December this year with the aim to improve its financial health, the lender's chairman has said.

"No new lending will be approved in the fourth quarter of the 2024 calendar year," Syed Abu Naser Bukhtear Ahmed disclosed while sharing his future business plans in an exclusive interview with The Financial Express recently.

However, the state-owned commercial bank's existing clients will continue to get limited lending support as working capital to run their ongoing business operations, according to the chairman.

He also said the bank would provide funds for its clients for balancing, modernisation, rehabilitation, and expansion of industrial units.

Additionally, the lender has decided to intensify its recovery drives across the country to reduce non-performing loans (NPLs) and enhance liquidity inflows, which are considered its key strengths.

"We want to engage the senior management in our recovery drives," the bank's chief said, adding the top 10 defaulters in every branch would be responsible for repaying their classified loans.

As part of the recovery plan, officials from the bank's 1,000 branches will target 10,000 defaulters nationwide to ensure the repayment of their dues. Additionally, four deputy managing directors of the bank have been tasked with recovering default loans from the top 20 defaulters.

The bank's managing director (MD) and chief executive officer (CEO) has been asked to monitor the overall recovery drives from the branch level to the head office.

"He must submit a comprehensive recovery report to the board of directors on the first Tuesday of every month," Ahmed stated in response to a query.

The bank will make maximum efforts to recover written-off, sub-standard, doubtful, and bad loans as well as loss accounts using different mechanisms, according to the chairman.

"We will focus on recovering the written-off loans with the assistance of introducers and recommenders," Ahmed said, adding that bank officials had also been instructed to reschedule classified loans by ensuring down payments, which would be collected in line with the central bank's directives.

"Actually, Agrani Bank is emphasising cash recovery that will help enhance its liquidity inflow," the chairman noted.

Ahmed, who previously served as the bank's MD and CEO, assumed his current role on September 8 for a three-year term. He also shared his experience of joining the bank as the MD and CEO on October 2, 2004, as well as the head of a PWC management team, which included eight advisors.

"I felt very sad when I saw that 38 per cent of the bank's loans in 2004 were non-performing, while both capital and liquidity were also negative," he continued. "Agrani Bank Limited was operating as a net borrowing bank in 2004."

But the experienced banker was able to meet a Tk 22 billion capital shortfall during his six-year tenure from earnings as well as the recovery of written-off and non-performing loans.

"I was able to meet the shortfall without taking funds from the government or other sources," Ahmed said, adding the NPL ratio had decreased from 38 per cent in 2004 to 11 per cent in 2010.

paying capacity has also fallen. If the companies fail to strike new deals with the government, they risk being shut down.

After nearly 15 years, Ahmed observed a further deterioration of the bank's financial health, noting the NPL ratio again increased to 36 per cent, while the capital-to-risk weighted assets ratio fell below 5 per cent, against the required 12.5 per cent on September 30 this year.

"The NPL amount may rise further by year end," the chairman said while replying to another query.

Meanwhile, classified loans in the banking sector reached an all-time high of Tk 2.85 trillion in September this year due to the redefined default-counting system applied to term credits.

The NPL volume jumped by nearly 96 per cent to Tk 2,849.77 billion on September 30 this year from Tk 1,456.33 billion on December 31 last year, according to the Bangladesh Bank's latest statistics.

The amount of classified loans in the banking sector was Tk 1,553.98 billion last year. However, NPLs increased by nearly 35 per cent to Tk 2,849.77 billion during the third quarter of this calendar year from Tk 2,113.92 billion in the preceding quarter, the central bank data showed.

The share of classified loans also rose to 16.93 per cent of the total outstanding loans during the period under review from 9 per cent nine months ago. It was 12.56 per cent on June 30 this year.

The senior banker also spoke about various issues like the rising trend in classified loans, lack of good governance, the size of the balance sheet, liquidity situation, and the overall banking sector.

Ahmed recommended an immediate amendment to the existing bank companies act to bring dynamism in the banking sector. He also suggested stopping loan approvals by the board of directors, adding the tenure of directors should be re-fixed at three years to ensure better corporate governance in the banking system.

"The board will provide the policy, which will be implemented by the management," he said, explaining the roles of the board and the management.

Ahmed is a seasoned banker combining over 50 years of national and international experience with a deep knowledge of the South Asian banking sector.

He has had exposure to the World Bank/International Monetary Fund reform agenda for the nationalised banking sector with an impeccable reputation for professionalism and management experience.

Besides, he has a proven track record of success in the management of banking operations in a demanding commercial environment in Bangladesh.

Ahmed served AB Bank as its executive vice president from 1995 to 1997. He was with Prime Bank as the MD and CEO from 1997 to 2001. After that, he took on the responsibility of the president and CEO of Southeast Bank in 2001 and stayed there till 2004.

He obtained his master's degree in business administration in 1969 from the Institute of Business Administration, the University of Dhaka.

Ahmed has received numerous national and international awards for his significant contributions to the development of the banking sector in Bangladesh. He is a director of Financial Excellence Limited and the managing director of Trade Hub (Bangladesh) Limited.

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