The banks, however, made small progress in increasing the recovery of default loans in the last one year but could not make any major breakthroughs as the government itself represents 50 percent of the top loan defaulters.

Sources said the central bank will soon hold a meeting with the NCBs on their MoU-based performance and the next set of directives.

The central bank first signed the one-year MoU to improve the NCB's performance back in 2003. Over a year, they made progress in some areas but were still lagging in cost cutting and credit management. This prompted the central bank to extend the MoU by another year.

In May last year, the central bank asked the NCBs to reduce their expenses by 5 percent by December. This reduction will be compared with their expenses incurred in December '03.

The banks were also asked to keep their credit growth limited within 5 percent at the same time.

But according to the December '04 figures now available, Sonali Bank's expenses rose by 8.4 percent and stood at Tk 390 crore, Janata Bank's by 4.71 percent to Tk 311 crore, Agrani Bank's by 6.39 percent to Tk 233 crore and Rupali Bank's by 2.65 percent to Tk 117 crore.

Explaining why their costs went up, the NCBs told Bangladesh Bank (BB) that they had to spend large sums of money to file and pursue a huge number of cases against defaulters at the Artharin Adalat last year. Besides, costs of petroleum, gas and power went up and accordingly basic expenses of the banks grew.

Sonali Bank's credit growth marked a rise of 8.29 percent to Tk 16,811 crore, Janata Bank's 7.18 percent to Tk 10,123 crore, Agrani Bank's 6.5 percent to Tk 8,403 crore and Rupali Bank's 12.47 percent to Tk 4,289 crore.

The banks attributed this growth to a sharp rise in demand for credits last year due to the twin floods.

The MoU also asked the banks to reduce their default loans, especially recovering from the top 20 defaulters.

The Rupali Bank has a total of Tk 772 crore default loan. Top defaulters owed it Tk 551 crore. It succeeded in recovering only Tk 2.78 crore from these top defaulters and Tk 56 crore from the remaining defaulters.

Bank sources said that out of the Tk 551 crore due from the top defaulters, Tk 277 crore is held by different government entities. And the government is not paying it.

Janata Bank has a total of Tk 2,199 crore default loan, of which top defaulters are holding back Tk 513 crore. The bank recovered Tk 9.31 crore from the top ones and regularised Tk 128 crore of their loan. The bank recovered Tk 184 crore from general defaulters.

"Two of our top defaulters are no longer in the defaulters' list as they regularised their loans," said a Janata Bank official.

Agrani Bank has Tk 2,692 crore default loan, of which top defaulters held Tk 638 crore. The bank recovered Tk 102 crore from the top ones.

Sonali Bank has Tk 4,958 crore default loan with top defaulters holding Tk 1,555 crore. The bank could recover only Tk 41 lakh from the top ones.