DHAKA: Bangladesh government has signed performance contracts with 14 state-owned banks and financial institutions to ensure accountability and transparency in the country’s financial sector.
Banking Division Secretary, M Aslam Alam, signed the performance contracts with chairmen, CEOs and managing directors of the banks and financial institutions.
The deals will remain effective till the end of fiscal year 2015-16. Under the contracts, the performance of the chairmen, CEOs and managing directors will be under evaluation on the basis of total loans, classified loans, earnings from classified loans and capital adequacy ratio (Basel II).
Bank and Financial Institutions Division made the move to sign performance contract to avoid big financial mishap like Hall-Mark loan scam, said officials.
The banks include Sonali, Janata, Agrani, Rupali, BASIC, Bangladesh Development Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Krishi Bank, Probashi Kallyan Bank, Ansar and VDP Development Bank, Bangladesh House Building Finance Corporation, Karmasangsthan Bank, Sadharan Bima Corporation and Jiban Bima Corporation.
Finance Minister AMA Muhith hopes the move will make some improvements in the balance sheets of the banks and financial institutions.
He said finance ministry had set up some performance criteria for the chairmen and managing directors bringing few reforms in the sector. The performance of Sonali Bank has deteriorated mostly in terms of capital and provision.
The bank also faced a provision shortfall of Tk1,086 crore in September this year, which was zero in December last year. It was due to hike in provision requirement along with the rising non-performing loans (NPL). The default loan rate of the bank rose to 37.65% in September from 34.53% in December.
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