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 13 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 6 GM level offices in 6 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 577 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.

Table  Basic facts and economic indicators (in million Taka).

Indicators	2004	2005	2006	2007	2008	2009
Authorised capital	10000	10000	10000	10000	10000	10000
Paid up capital	3272	3272	5000	9000	9000	9000
Reserved Fund	2834	3034	2831	2934	12905	17249
Deposits	252233	277079	302303	328989	354019	406112
(a) Call Deposits	61529	50500	79204	94372	111645	128088
(b) Term Deposits	190704	226579	223099	234617	242374	278024
Loans and Advance	168283	227010	241029	206348	231096	254022
Investment	58895	43636	39978	88891	100320	113479
Total Asset	292181	337687	352894	383508	494028	543651
Total income	15758	19864	23130	25850	26879	32687
Total Expenditure	14806	15900	20125	19908	20460	24631
Foreign Currency Trading	219131	272944	260745	253235	347042	263914
a) Export	57213	64092	79752	79783	79390	64442
b) Import	85238	114528	67510	63971	151465	96864
c) Remittance	76680	94324	113483	109481	116187	102608
Total Manpower	24450	23933	23273	22542	21839	21506
a) Officers	12732	12380	12118	11769	11507	17370
b) Staff	11718	11553	11155	10773	10332	4136
Correspondents Banks	346	345	347	576	577	581
Total Branches (in numbers)	1186	1183	1183	1183	1181	1183
a) Domestic	1184	1181	1181	1181	1179	1181
b) Overseas	2	2	2	2	2	2
Agriculture Credit
Loan Disbursed	6169	5494	5145	4101	5221	6174
Realised	5440	5202	5552	6489	8252	7436
Industrial Credit
Loan Disbursed	2517	3229	3232	3539	7398	9731
Realsied	3066	3227	2465	2426	5653	6816
Loan Outstanding by Sector
Agriculture and Fisheries	20484	21373	21286	29090	21877	22579
Industry	28801	30258	32445	34019	34091	36574
Trade and Commerce	53607	93524	101317	78016	96005	105241
Poverty Reduction	4211	3803	4678	3117	4819	4822

Source  Government of Bangladesh, Ministry of Finance, Banking and Financial Institution Division, Bank o Arthik Prothisthan Samuher Karjaboli [Annual Report on Banks and Financial Institutions], 2004-05 to 2009-10.

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 is functioning through six branches in London, Luton, Birmingham, Bradford, Manchester and Camden. 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.

A Comprehensive Management Plan for 2008-2012 has been adopted under Enterprises Growth and Bank Modernization Project funded by World Bank to introduce model banking system, to develop SBL into more profit earning institution and to prepare and implement rules and procedure for making it more functioning to meet the demand of the day. In 2006, SBL was awarded as The Best Retail Bank in Bangladesh on 12 June 2007 by the Asian Financial Journal The Asian Banker based in Singapore in recognition of its outstanding contribution in the banking sector. [Muhammad Abdul Mazid]