The board of directors of Bangladesh Bank on Tuesday expressed concern about the rise of the capital shortfall in the four state-owned banks to Tk 9,641 crore as on March 31, 2013.
The capital shortfall in the banks increased as the banks kept a large amount of provision against their classified loans, said BB officials.
The board of directors of the BB at a meeting, presided over by BB governor Atiur Rahman, expressed concern as the key financial indicators of the SCBs including the required capital weakened.
According to the latest BB data, the capital shortfall in Sonali Bank increased to Tk 5,245 crore, that in Janata Bank Tk 1,111 crore, that in Agrani Bank Tk 2,120 crore and that in Rupali Bank 1,165 crore.
A BB official, who attended the board meeting, told New Age that a ‘special diagnostic exam’ report on the SCBs conducted by the BB had been placed before the board.
The central bank conducted the exam on the four SCBs in the last two months following the suggestions of the World Bank.
The ‘special diagnostic exam’ was conducted on the basis of three financial indicators of the SCBs —asset quality, liquidity, and internal control and compliance.
The BB official said the three indicators of the SCBs had weakened significantly in the last two years as the banks were involved in different financial scams in the last few years.
Under the circumstances, the board of directors of the BB at Tuesday’s meeting asked the central bank’s officials to take measures to develop the financial health of the banks.
The BB official said the BB had recently changed the credit growth targets for Sonali Bank to 8 per cent, Janata Bank to 12 per cent, Agrani Bank to 10 per cent and Rupali Bank to 10 per cent for this calendar year from 15 per cent.
The BB has taken the decision as the defaulted loan, provision and capital shortfall in the banks increased in every quarter, he said.
The defaulted loan in the four banks increased to Tk 24,404 crore as on March 31, 2013 from Tk 21,514 crore as on December 31, 2012, showed the BB data.
The provision shortfall of the banks also increased to Tk 7,468.02 crore as on March 31, 2013 from Tk 3,732.47 crore as on December 31, 2012.
Another BB official said the central bank had recently arranged a meeting with the four SCBs in which the central bank suggested them to apply to the government for capital.
Sonali Bank managing director Prodip Kumar Dutta said the capital shortfall in his bank had increased as the classified loans soared due to the new regulation of the BB.
He claimed that the capital shortfall in his bank had recently decreased and it now stood at Tk 3,300 crore-Tk 3,400 crore.
He said, ‘In June, we sent a letter to the government to provide capital amounting to Tk 3,350 crore. I hope that the government will respond to our letter as early as possible.’
BB board member Sadiq Ahmed told New Age that the board of directors of the central bank was worried as the capital shortfall in the four banks had increased massively.
The board also discussed the recent scams in BASIC Bank as the financial health of the bank deteriorated in the last few years, he said.
He said, ‘At the meeting we discussed how to develop the asset quality of the four banks.’
Atiur Rahman told New Age that the central bank had sent a letter to the government to provide the required capital to the four SCBs so that the banks could overcome the crisis.
The government allocated Tk 5,000 crore in the budget for the current financial year 2013-14 for the required capital of the four SCBs, he said.
Atiur said, ‘I hope the government will take decision on the issue soon.’
-With New Age input
