The National Bank of Pakistan (NBP), a foreign bank operating in Bangladesh, has been making losses year after year, with its banking activities have now come to a standstill.
The foreign bank, which started its journey in the country in 1994, is now facing a crisis of its existence owing to its astronomical proportion of default loans.
At the end of last year, NBP’s defaulted loans stood at Tk 1,374.8 crore, which was at 97.7 per cent of its total loans, according to the data from the Bangladesh Bank.
The NBP has four branches in the country with 76 employees but its loan disbursement exercise has been stagnant for several years owing to its liquidity shortage.
The Pakistani bank fell into big trouble by giving loans to some fraudulent clients in 2013-14. The lender is yet to recover the sum, said a senior official of the foreign bank seeking anonymity.
The top loans defaulters of the bank include Ibrahim Textile, Cotton Group, Koba Group, World Tell BD, DG Knitting Company, Aleya Sweater, Sara Group.
As many as 65 officials including the former president of National Bank of Pakistan had to be punished in 2017 owing to the loans irregularities in the lender’s Bangladesh subsidiary, he said.
“It is very difficult for us to recover the bad loans as most of the clients do not want to return the money because it is a Pakistani bank,” he added.
And because of the sluggish progress in loan recovery from the defaulters, the bank has been in the red year after year.
The correspondent paid a visit to the bank’s Motijheel and Gulshan branches yesterday but saw no client. The NBP officials were passing a restful time due to lack of clients.
Loan disbursement has been suspended from last year, said Md. Quamruzzaman, the present country head and chief executive of the Pakistani bank’s Bangladesh operations.
“We are now emphasising on recovery from the defaulters. We are trying our best to recover the money.”
The bank has filed a total of 143 cases against 104 defaulters to recover the money, said Quamruzzaman, the first Bangladeshi to hold the post.
Since 2015, the NBP has recovered a total of Tk 193.99 crore from defaulters, he said.
“Big amounts of money are in the process of being retrieved,” said Quamruzzaman, who joined the foreign bank in 2015 with the view to giving a special push to the loan recovery drive
Although it is a foreign bank, it is still bad news for depositors that a bank is making losses year after year, said AB Mirza Azizul Islam, a former advisor to a caretaker government.
“This is tarnishing the image of the entire banking sector,” he said, adding that the central bank should take necessary steps in this regard.
Established in 1949, the NBP is a subsidiary of the State Bank of Pakistan.
As of September last year, the bank has 1,511 branches across Pakistan with assets of approximately $20.2 billion. Besides, the bank has branches in 21 countries.
At present, the bank has four branches in Bangladesh, located in Chittagong, Sylhet, Gulshan and Motijheel.