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21 banks, Islamic wings poor in credit-deposit ratio
AKM Zamir Uddin :
The advance- or credit-deposit ratio of a number of banks increased in six months till June 7 with around 21 banks and Islamic wings of the banks going past the limit set by the Bangladesh Bank, the latest central bank data showed.
Conventional commercial banks, according to the central bank rules, are not allowed to invest more than 85 per cent of their deposits while Islamic banks and Islamic branches of conventional commercial banks can invest up to 90 per cent of their deposits.
The data showed that nine conventional banks had advance-deposit ratio more than 85 per cent while 12 Islamic banks and Islamic banking wings of conventional banks had the ratio over 90 per cent as of June 7.
‘These banks are maintaining ADR beyond the limit set by the Bangladesh Bank despite the bank’s warning. The banks have failed to maintain the ADR because of aggressive banking amid liquidity crisis,’ said a central bank official.
He said these banks disbursed more loan than the deposits they had collected in six months.
Among the commercial banks, the ADR of the City Bank, which stood at 84.81 per cent as of December 31, 2011, soared to 90.25 per cent as of June 7.
The deposit of the bank decreased to Tk 8,155.62 crore on June 7 from Tk 8,237.86 crore on December 31, 2011.
The bank’s advances, however, increased to Tk 7,360.46 crore on June 7 from 7,161.49 crore on December 31, the data showed.
The data showed that as of June 7, the ADR of private commercial bank Eastern Bank had increased to 87.31 per cent from 81.96 per cent as of December 31, 2011, of Dhaka Bank to 87.05 per cent from 83.84 per cent, of Standard Bank to 87.82 per cent from 86.97 per cent and of the NCCBL to 87.31 per cent from 82.86 per cent
The ADR of the state-run BASIC Bank increased to 89.03 per cent on June 7 from 87.87 per cent on December 31, 2011, of Rajshahi Krishi Unnayan Bank to 98.78 per cent from 88.62 per cent and of Bangladesh Development Bank to 133.78 per cent from 122.30 per cent.
Besides, National Bank of Pakistan’s ADR remained beyond the limit at 116.96 per cent on June 7, coming down from 122.36 per cent on December 31, 2011.
Officials said that among 47 banks in the country, seven are Islamic banks. Out of the 40 commercial banks, 16 have Islamic banking wings. Most of the Islamic banks are floating the limit of ADR set by the central bank.
The ADR of EXIM Bank increased to 99.09 per cent as of June 7, from 95.35 per cent as of December 31, 2011, of ICB Islamic Bank to 120.19 per cent from 118.77 per cent, of Shahjalal Islami Bank to 94.08 per cent from 92.90 per cent, of Al-Arafah Islami Bank to 92.51 per cent from 91.67 per cent, of First Security Islami Bank to 92.66 per cent from 88.99 per cent and of Social Islami Bank to 90.33 per cent from 88.07 per cent.
The ADR of the Islamic banking wing of Pubali Bank increased to 117.61 per cent from 99.44 per cent, of the City Bank to 182.99 per cent from 106.24 per cent, of Agrani Bank to 196.24 per cent from 163.67 per cent and of AB Bank to 174.13 per cent from 149.04 per cent.
The ADR of Bank Asia remained beyond the limit at 136.28 per cent, coming down from 156.87 per cent on December 31, 2011 while the HSBC’s ADR came down to 222.96 per cent from 283.94 per cent.
A central official said, ‘Islamic wings of the conventional banks are collecting capital from their mother institutions for disbursement to the clients as loans. Such type of banking is illegal under Islamic banking rules and regulations.’
He said, ‘The Bangladesh Bank has earlier taken punitive action against some banks which failed to maintain the ADR.’
Besides, the central bank has recently held another meeting with the failed banks over maintenance of the ADR policy, he said.
He said that the banks which failed to bring down the ratio were not allowed to open new branches and ranking of the banks would be downgraded in CAMELS rating.
[ Business ] 2012-07-22