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Excess SLR And Its Impact On Profitability Of State-Owned Commercial Bank: Bangladesh Perspective

Volume 3 - Issue 12, December 2019 Edition
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Author(s)
Subrata Deb Nath, Md. Mahbubur Rahman, Munna Rani Biswas, A.T. M. Mahfuzul Islam
Keywords
SLR; State-owned commercial Banks; Profit; Loss
Abstract
The purpose of the study is to review the amount SLR and to find out the amount of loss incurred due to maintaining excess SLR. The study found that excess SLR of State-owned Commercial Banks (SOCB) was gradually increased in 2015 and 2016 with some exceptions. On the other hand, although COF (Cost of Fund) was gradually increased in the period of 2014 to 2016 but WAIR (Weighted Average Interest Rate) of investment was drastically fall in 2015 and 2016. As a result, in 2015 Sonali, Janata, Agrani, Rupali & Basic bank incurred loss of Tk. 557.41, 255.26, 391.33, 52.23 & 102.99 crore and in 2016, it was Tk. 307.57, 352.14, 468.23, 62.60 & 56.54 crore respectively. The implication of the study is that SOCBs can use the findings to take necessary actions regarding excess SLR. Moreover, this study is a unique one in Bangladesh perspective, because a number research conducted on the investment in govt. securities or security market related topic but ''Excess SLR and its impact on Profitability of State-owned Commercial Bank: Bangladesh Perspective" is new and unique.
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