Finance minister, BB governor disappointed over Janata Bank

Finance Minister AHM Mustafa Kamal and Governor of the Bangladesh Bank Fazle Kabir have expressed frustration over the condition of state-owned Janata Bank.

"At a time when we are celebrating 50 years of independence and the birth centenary of Bangabandhu, the bank's balance sheet is not very promising," said Kamal while addressing the inauguration of Mujib Corner at the bank's headquarters in the capital's Motijheel on Sunday.  

On the other hand, Kabir stressed raising the bank's capital adequacy, reducing default loans, and increasing loan disbursement.

Kamal said Janata Bank had once been a people-oriented bank.

"I do not know what its condition is now," said the minister who joined the programme online.   

Over the last five years, Janata Bank's default loans tripled to more than Tk13,620 crore at the end of December 2020. The amount was the highest among all state-owned banks.

The bank's bad debts also rose significantly due to several scams, including those involving Crescent Leather and AnonTex Group. At the end of last year, more than 94% of the bank's default loans turned into bad loans, the highest among all public and private banks.

The finance minister said he would visit the bank one day accompanied by the governor of the central bank and would talk more about these issues then.

"We have decided to prevent waste and corruption everywhere as we celebrate Bangabandhu's birth centenary. Bangladesh will reach its goal if we can eliminate waste with honesty," he added.  

The governor of the central bank, who attended the event in person, said the bank's deposits had grown by 20% last year but loan disbursement had not increased at that rate.

Apart from increasing loan disbursement, the governor suggested focusing on implementing the government's stimulus packages.

Asadul Islam, senior secretary to the Financial Institutions Division under the finance ministry, said banks in the future should continue providing services the way they had done so during the Covid-19 pandemic.

He said Janata Bank should increase the quality of service.

Acknowledging shortcomings in providing customer service, the bank's Chairman SM Mahfuzur Rahman said they were working to improve the quality of service.

He also said steps were being taken to address capital deficit and the recovery of default loans.

The bank's capital deficit at the end of December last year was around Tk5,500 crore. According to Basel III, the bank's capital adequacy ratio should be 12.5%, but it is only 1.01%.

Not only Janata Bank but all the state-owned banks, except for Bangladesh Development Bank, have capital deficits.

Default loans reached Tk88,779 crore in the banking sector at the end of last year. Of this, about Tk42,272 crore was at the six state-owned commercial banks.

Noting that the bank lags in assisting small entrepreneurs, Mahfuzur said business conferences could not be held in different divisions and districts due to the pandemic and this had had some negative impacts.

Mujib Corner was inaugurated on the 12th floor of the bank's head office under the supervision of Ekushey Padak winning photographer Pavel Rahman. It features various books and photographs on Bangabandhu.

A mural of Bangabandhu will also be painted on the ground floor, said Md Abdus Salam Azad, managing director and chief executive officer of the bank.

He did not talk about the current situation of the bank in his welcome speech.