Seven state-run banks have failed to meet the minimum capital requirement, meaning they need further taxpayer-funded recapitalisation to stay afloat.
The latest data from the Bangladesh Bank showed 12 banks, including the seven state lenders, faced a capital shortfall of Tk 17,653 crore as of September last year.
The lenders are Sonali, BASIC, Rupali, Janata, Agrani, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Bangladesh Commerce Bank, Community Bank Bangladesh, ICB Islamic Bank, AB Bank, and National Bank of Pakistan.
Among them, Krishi Bank had the highest amount of capital shortfall of Tk 9,078 crore, up 10.63 percent from a year ago.
Sonali’s capital shortfall stood at Tk 2,056 crore, a U-turn from a year ago, when it had a surplus of Tk 848 crore.
“The central bank should take immediate measures to address the problem as such a situation sends out a negative message to the international community and local businesspeople that the banking sector was weakening,” a BB official told The Daily Star yesterday.
The widening default loan was one of the major reasons for the shrinking capacity of the banks to keep the required capital.
As of September, default loans in the banking sector stood at Tk 116,288 crore, up 23.82 percent from nine months earlier.
BB data showed the capital shortfall at the state-owned banks stood at Tk 14,664 crore as of September.
The government has been recapitalising the state lenders since 2009 but they are yet to strengthen their capital base in absence of corporate governance.
Foreign businesses usually look at the capital base and non-performing loans of scheduled banks before making any investment decisions, the central banker said.
“This type of capital shortfall will put foreign investors at bay,” he said, urging the central bank to strengthen monitoring to rein in financial scams.