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]