Banks' capital base shrinks
Banks' capital base shrank in April-June compared to the previous quarter mainly due to deterioration in the financial health of state banks.
Overall, banks' capital adequacy ratio (CAR) fell 0.46 percentage point to 10.27 percent in June.
In line with international standards, banks have to maintain a minimum CAR of 10 percent against their risk-weighted assets.
Most of the state banks had capital shortfall in June due to which the overall CAR dropped.
Of the state-owned banks, capital deficit at Sonali Bank was Tk 2,678 crore and its CAR was 2.44 percent in June, according to central bank statistics.
Janata Bank's capital deficit was Tk 345 crore and CAR was 9.06 percent, while the figures were Tk 554 crore and 6.18 percent for Rupali Bank. Capital shortfall at BASIC Bank was Tk 2,916 crore and its CAR was -15.53 percent.
State-owned specialised banks' capital deficit was Tk 6,417 crore in total.
The government-controlled Bangladesh Commerce Bank had a capital shortfall of Tk 245 crore and its CAR was 5.18 percent.
The capital base of the state banks shrank due to a rise in their default loans, a Bangladesh Bank official said.
The central bank has started holding meetings with the boards of the banks to improve the situation. "So far we have sat with the boards of Sonali and BASIC banks," he said.
In the current fiscal year's budget, the government kept aside Tk 5,000 crore for providing funds to the state banks to help them meet their capital shortfall.
An official of Sonali Bank said they have taken an initiative to realise default loans and their capital situation will improve by December.
International credit rating agency Fitch in a recent report said the banking sector of Bangladesh is vulnerable to shocks, as both asset quality and governance are weak, especially in state-owned banks.
The gross non-performing loans ratio of the sector increased to 10.5 percent in the first quarter of 2015 from 9.7 percent in the fourth quarter of last year.
Fitch also said Bangladesh Bank seems committed to strengthening governance in the banking sector.
However, private banks, except one, did not have any capital shortfall. In June, the private banks had a capital surplus of Tk 6,472 crore.
Foreign banks too had a huge capital surplus -- Tk 4,128 crore.
In June, the overall CAR of the private banks was 11.84 percent and that of the foreign banks 24.14 percent.
On June 30, banks in Bangladesh had a total capital of Tk 68,230 crore against a requirement of Tk 70,488 crore.
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