Capital shortfall of state banks alarming
Eight state banks had a capital shortfall of Tk 12,683 crore at the end of June even though they got a handsome amount of fund from the government exchequer.
In other words, the banks are a long way off from maintaining capital as per international standards.
Their private and foreign counterparts though are successfully maintaining their stipulated capital adequacy ratio, as per a report of the finance ministry, which was presented in a workshop on Sunday.
As the eight banks' default loans swelled so did their provisioning requirement, due to which their capital bases have come under immense pressure.
Between fiscal 2013-14 and fiscal 2016-17 the government has infused Tk 9,639 crore to the banks as capital.
At the end of March this year, the banks' capital shortfall was Tk 13,987 crore, meaning the situation improved the following three months due to injection of fresh money but it is still worrying.
Scam-hit BASIC Bank received Tk 3,390 crore, Sonali Tk 3,005 crore, Agrani Tk 1,081 crore, Janata Tk 814 crore and Rupali Tk 310 crore. But at the end of June, Sonali had a capital shortfall of Tk 2,619 crore, BASIC Tk 2,210 crore and Rupali Tk 740 crore.
At the event, Agrani Bank Chairman Zaid Bakht said the state-run banks had to invest in various development projects of the government.
For example, four public banks invested Tk 4,000 crore in the Hanif flyover, for which the banks are now facing problems.
On the other hand, Agrani granted loans to the Bangladesh Petroleum Corporation and the Bangladesh Jute Mills Corporation, both state-owned agencies, which had been paid through bonds.
The interest rate on the bonds is lower than the bank's cost of fund. As a result, the bank had to count Tk 1,000 crore in losses, Bakht said.
"Those who criticise the government for providing capital to the state banks need to take these into consideration," Bakht added.
The central bank last year took steps to improve banks' financial health by increasing their capital to risk-weighted assets (CRAR) ratio in line with the Basel III standards, which was introduced in January.
CRAR is a measure of a bank's capital and is used to protect depositors and promote the stability and efficiency of financial systems around the world.
Basel III is a comprehensive set of reform measures developed by the Basel Committee on Banking Supervision to strengthen regulation and supervision and reduce risks of the banking sector globally.
As per this standard, banks would have to maintain 11.2 percent as capital of their risk-weighted assets, which will be 12.19 percent in 2019.
In June, the banks' average CRAR was 10.86 percent, which was 10.68 percent three months earlier.
The state-owned commercial banks' CRAR was 6.9 percent, private banks' 12.18 percent, and foreign banks' 23.34 percent. But the two government-owned specialised banks' CRAR was -6.18 percent.
In June this year, the total capital in the banking system was Tk 89,959 crore, up from Tk 84,424 crore in March this year, according to the Bangladesh Bank.
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