Bangladesh’s Financial Institutions Division has directed Sonali Bank PLC to prioritize actual cash recovery of defaulted loans rather than relying on reclassification or accounting adjustments. The instruction was raised at a recent meeting between Financial Institutions Division Secretary Nazma Mobarek and the bank’s board, which reviewed its financial and operational condition, progress, risks, opportunities and policy needs.

Although Sonali Bank’s default-loan ratio has fallen to 16.4 percent, the division considers the level still high by the standards of a sound and efficient commercial bank. It called for strict oversight, stronger governance and safeguards to ensure Bangladesh Bank’s special exit facility supports genuine settlement and cash collection, rather than extending loans. The board was also asked for information on classified loans eligible for the facility, applications received and cases resolved.

The government urged greater financing for cottage, micro, small and medium enterprises, agriculture, women and new entrepreneurs, while stressing borrower assessment, cash flow, business viability and ownership checks before lending. Priorities for the next 12 to 24 months include improving recoveries, expanding quality lending and digital banking, strengthening risk management, and improving customer services and financial-inclusion programmes.