As per the bank's memorandum of understanding (MoU) with the central bank, the recovery target was fixed at Tk 18 crore from these listed defaulters by December 2006.

These defaulters owed Tk 820 crore to the Agrani Bank, of which Tk 363 from 3 government entities also remained unrealised.

The bank sources said that the amount it recovered in the last six months was solely from the private enterprises with zero recovery from the state owned enterprises (SoEs).

The sources, however, said that negotiations with these government entities are on to realise the classified loans.

As on June 2006, the classified loan of the bank stood at Tk 2982 crore, of which Tk 250 crore was supposed to be realised in accordance with the MoU. But the bank has been able to recover only Tk 96.82 crore, which is 39 percent of its yearly target.

The central bank review suggested that Agrani Bank should accelerate its pace of recovery drive to achieve 100 percent target.

While talking to The Daily Star, the Agrani Bank top brass said they realised Tk 127 crore till August this year. He also voiced his determination to continue the drive to achieve the bank's overall target by the end of the calendar year.

Despite the bank's glaring success in bad loan recovery, its default loan figure is still high, which is 27. 42 percent of the total outstanding loans.

Admitting the fact, Agrani Bank officials claimed that they have no provision short fall, rather they have surplus. As a result, their net default loans stand at 6.48 percent.

As per the MoU, the bank had a target to reduce its operating expenses by five percent. The bank was directed to keep its operating expenses within Tk 254.79 crore in 2006. But during the first half of the year it spent 54.76 percent of its yearly target that stands at Tk 139. 54 crore.

Agrani Bank sources said the bank spent most on salary of its members of the staff, which is non-reducible. The bank is trying to cut other expenses gradually, they added.

The bank, however, has been able to reduce its cost of deposit. As on June 2006, the cost of deposit declined to 3.88 percent, which was 4.40 percent by the end of last year.

As per the MoU, the growth in total outstanding loans and advances of the bank was set to be limited to five percent. During the January-June period of 2006, such growth rose to 9.35 percent, the BB review further said.

The bank, however, has been able to bag Tk 185 crore profit during the last six months of the year.