Sonali Bank Limited

Sonali Bank Limited the largest state owned commercial bank of Bangladesh. It was established by taking over the branches of National Bank of Pakistan, Bank of Bawalpur and Premier Bank that were functioning in East Pakistan until 1971 and was nationalised under the bangladesh bank (Nationalisation) Order 1972. The bank has been converted to a public limited company with 100% ownership of the government and started functioning as Sonali Bank Limited (SBL) from 15 November 2007 taking over all assets, liabilities and business of Sonali Bank. After corporatisation, the management of the bank has been given required autonomy to make the bank competitive and to run its business effectively.

Sonali Bank Limited is governed by a Board of Directors consisting of 10 members nominated by the government. The Bank is headed by the Chief Executive Officer and Managing Director. CEO is assisted by 3 Deputy Managing Directors, 13 General Managers and other Senior Executives. The corporate headquarters of the bank is located at Motijheel, Dhaka, the main commercial centre of the capital. It has 8 GM level offices in 8 Divisions, 42 Principal and 39 Regional Offices at district level. Inside the country Sonali Bank Limited has two wage earners branch and 43 authorised dealers to conduct foreign exchange business. It has got an overseas banking transaction arrangement with 684 correspondents. In 1994, the bank established in New York a full-fledged subsidiary company of the name the Sonali Exchange Company Inc. to expand its participation in international banking. The Bangladeshis who working in USA send remittances through this company which is operated with its main office at Manhattan, New York city and branches/booths at Brooklyn, Astoria, Jackson Heights in New York, Peterson in New Jersey, Atlanta in Georgia, Detroit in Michigan and Los Angeles in California.

Basic Facts and Economic Indicators (In Million Taka)

Indicators	2018	2019	2020
Authorized Capital	60000	60000	60000
Paid up Capital	45300	45300	45300
Reserved Fund	39596	34646.6	49926
Deposits	1093866.2	1158787.8	1258786.3
a) Call Deposits	298078.5	319235	294144.8
b) Term Deposits	795787.7	839552.8	964641.5
Loans and Advances	464165.8	551026.3	585938.3
Investment	440921.1	500386.9	629985.9
Total Asset	1306842.3	1472604.6	1590831.2
Total Income	78321.4	77019.4	85899.1
Total Expenditure	58064.1	59709.8	64115.2
Foreign Currency Trading	392303.9	393113.8	319890.7
a) Export	32502.6	25665.6	25173.1
b) Import	257020.2	255965.2	165662
c) Remittance	102781.1	111483	129055.6
Total manpower	17271	17480	18918
a) Officers	14671	15198	17602
b) Staff	2600	2282	1316
Correspondent Banks	669	682	684
Total Branches (in numbers)	1215	1224	1226
a) Domestic	1213	1222	1224
b) Overseas	2	2	2
Agriculture Credit
Loan Disbursed	11634.1	13975	12577.5
Realised	12831.9	14502	6897.6
Industrial Credit
Loan Disbursed	10729	9305.4	13324.7
Realsied	9509	9030.8	1829.8
Loan Outstanding by Sector
Agriculture and Fisheries and Forestry	50012.9	52831.3	5591.8
Industry	64327.6	66780.7	66780.7
Trade and Commerce	235981.4	260000.7	282253.8
Poverty Reduction	8862.1	8785.7	1188
CSR	19	47.6	19

Source Government of Bangladesh, Ministry of Finance, Banking and Financial Institution Division, Barshik Protibedon [Annual Report on Banks and Financial Institutions], 2019-20 and 2020-21.

Besides, Sonali Bank (UK) Limited was established in the United Kingdom with joint ownership of Sonali Bank and the Government of Bangladesh in 2001. It had been functioning through six branches in London, Luton, Birmingham, Bradford, Manchester and Camden. The Sonali Bank (UK) was however closed in 2022 after its failure in compliance on 9 members of issues. Remittances from Bangladeshi expatriates employed in Malaysia are being channeled through May Bank of Malaysia under an arrangement with Sonali Bank Limited. NRBs living in middle-eastern countries are also dispatching their wage earnings through 44 exchange houses in business with SBL.

SBL has initiated appropriate arrangements in line with government directives to ensure the smooth and speedy disbursement of remitted money to the relatives and nominated persons of wage earners. The salient features of the arrangements are i) Disbursement of the remittance within eight to twenty four hours through 61 outlets with the aid of RMS Software; ii) Establishing one workstation for each exchange house /bank in the Wage Earners Corporate Branch; iii) Depositing the remittance at beneficiary's account instantly in 300 branches through IFRMS (Instant Financial and Reconciliation Messaging System); iv) Branches where IFRMS and RMS are not available there is an arrangement to transmit the remittance to the beneficiaries accounts by courier service; v) Complains related to remittance are resolved and confirmed immediately by three complaint cells at the Headquarters; vi) Three Representative offices (Kuwait, Jeddah and Riyadh) provide facilities and services for opening accounts in the Sonali Bank Limited, getting guarantee certificate against balance, investment in Wage Earners Bond, Premium Bond, Savings Certificates etc to the wage earners; vii) Observance of Remittance Service Fortnight every year; viii) Creating awareness among wage earners by media propaganda regarding the legal implications of financial crime like money laundering and hundi system and encouraging them to send remittances through proper banking channel and ix) Rewarding wage earners for remitting through proper channel.

Sonali Bank performs all traditional banking functions including deposit mobilisation and lending. The bank discharges the treasury functions as the agent of the Bangladesh Bank. It collects tax, stamp duty and registration fees, operates special savings accounts, pays salaries to the teachers of schools, madrasahas, and colleges and pension to retired government employees. The bank provides funding to some income generating and economic development projects namely, Poverty Alleviation Credit Programme, Female Special Credit Programme, and Agro-based Industrial Credit Programme in the rural areas. It has a large participation in foreign exchange business and off-balance sheet activities. At present, the bank has correspondent relationships with 380 foreign banks/bank offices throughout the world.

Sonali Bank monitors its work through a performance budget. It has a marketing intelligence unit and conducts a programme of human resources development through training and motivation. It introduced the Lending Risk Analysis suggested by the Financial Sector Reform Programme. Business policies of the bank in the 1990s included fulfilling capital adequacy requirement, mobilising deposits in large amounts, and making investments in more profitable ways. The bank diversified its activities in off-balance sheet items to expand its area of operations and increase non-interest based incomes.

In 2019, bank deposits accounted for 9.1 per cent of total banking sector deposits and loans and advances accounted for 5.1 per cent of total banking sector loans and advances. The average interest rate differential between June 2019 based deposits and loans and advances was 2.2 percent. [Muhammad Abdul Mazid]