Rupali Bank established under the Bangladesh Banks Nationalisation Order 1972 by taking over the assets and liabilities of the Muslim Commercial Bank, Australasia Bank and Standard Bank that were functioning in East Pakistan. The bank started operations in March 1972 with an authorised capital of Tk 50 million and paid up capital of Tk 10 million. The paid up capital was raised to Tk 20 million in 1973. In view of the increased volume of banking activities and business, its authorised and paid up capital were further increased to Tk 7 billion and Tk 1.25 billion respectively.

The bank was denationalised on 14 December of 1986 with the provision that the government of Bangladesh would hold at least 51% of its share capital and the rest would be subscribed by the general public. In 1997, the government's share in its paid up capital was 94.55%. Because of the very large share of the government in the bank's capital, it is still considered as a nationaliased commercial bank. On 30 June 2000, the number of shareholders of the bank was 2,723. On that date, its reserve funds stood at Tk 181 million.

In addition to traditional deposit taking in various accounts and providing loans to almost all sectors of the economy, the bank offers different types of services including agency services to the government in food procurement and collection of government revenue through the network of its branches all over Bangladesh. Rupali Bank has large participation in foreign exchange business including overseas remittance services. The total volume of foreign exchange business handled by the bank in servicing imports and exports of goods and remittance during 1999-2000 amounted to Tk 22.743 billion compared to only Tk 480 million in 1972-73. At present, the bank has correspondent relationships with 175 foreign banks/bank offices throughout the world.

The management of the bank is vested in a 7-member board of directors appointed by the government. The board has a chairman assisted by 6 directors. The managing director is the chief executive of the bank. The bank has a divisional office at each of the six administrative divisions of the country and in addition, it has regional offices. The various important divisions/departments of the bank at its head office are for personnel, establishment and welfare, general banking, central accounts, development, planning and research, general credit, specialised credit, international transactions, audit and inspection, law and recovery and rural credit and reconciliation. The bank has a training institute at Dhaka for imparting training to its own personnel, the total number of which was 6,044 on 30 June 2000. On 31 December 2000, the bank had 512 branches, of which 250 were in the urban and 262 in the rural areas. Also it had an overseas branch in Karachi.

In 1972, Rupali Bank started its banking operations with a total initial deposit of Tk 380 million and advances of Tk 410 million, which increased to Tk 43.45 billion and Tk 33.78 billion respectively in December 2000. The credit-deposit ratio of the bank has been reasonably consistent throughout the period from 1972 to 2000, which reveals that it has been maintaining a required level of liquidity. In September 1999, the interest rate offered by the bank on the savings deposits was 7.75%, while the average interest rate charged by it on lending in different sectors was 13.57%. The bank's total investment in government securities, treasury bills, debentures and shares was Tk 10.5 million in 1972 and Tk 9.0 billion in 2000. During 1999, the total amount of loans and advances disbursed by the bank was Tk 13.102 billion, while the total recovery during the same period was Tk 993 million. The recovery rate in terms of total outstanding loans was 12.70% in 1999 and 12.47% in 2000. On 30 June 2000, the cumulative balance of outstanding loans and advances of the bank was Tk 26.10 billion. The amounts of overdue loans and advances on that date were Tk 7.71 billion and Tk 8.02 billion respectively. On 30 June 2000, the ratio of total overdue to total outstanding loans was 30.73%.

Poor loan recovery and the increase in the rate of overdue loans have degraded the quality of its lending assets. The rate of classified loan of the bank on 31 December 2000 was 37.84% and the absolute amount of such loans was Tk 12.78 billion. Of the total loans and advances of the bank, the borrowings by the public sector was 14.41% and the bank's loan to the public sector up to December 2000 was Tk 4.871 billion, of which Tk 1.820 billion was classified. Up to the same date, the bank had disbursed Tk 2.394 billion as rural credit. On the other hand, the bank borrowed funds from the inter-bank market, the amount of which was Tk 670 million in 2000. The total and net income of the bank on 31 December 2000 was Tk 3.74 billion and Tk 100 million respectively. The bank experienced a net loss Tk 300.81 million in 1999 due mainly to keeping the provisions for classified loans, increase in operating expenses and a decline in net interest income and commission and exchange incomes.

The major economic purposes in which Rupali Bank lent most of its funds during 1984 were agriculture, hunting, forestry and fishing (9.09%), manufacturing (21.36%), wholesale and retail trade, hotels and restaurants (32.50%), insurance, real estate and business services (2.73%), transport, storage and communication (2.04%) and others (32.04%). Throughout the period from 1972 to 2000, the bank's major lending was in manufacturing and the agriculture sector. The bank provided Tk 9.285 billion to 142 industrial projects in 1999 and the cumulative balance of its total industrial loans to 1,080 projects stood at Tk 21.373 billion.

Rupali 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. [S M Mahfuzur Rahman]