The finance ministry has put a restriction on four SCBs to make fresh lending from the Tk 4,100 crore recapitalisation funds in an effort to tighten the bad lending culture of the struggling banks.
As the four state-owned commercial banks—Sonali, Janata, Agrani and Rupali—have above Tk 12,000 crore in classified loans as of December 2013, the latest directives would have an impact to shrink the soaring bad loans, a top finance official said.
The recapitalisation fund is meant only to be spent on the head of capital expenditure of the banks, the order of the ministry said.
‘Neither lending nor revenue expenditure from the recently injected fund to four banks is permissible,’ a senior official at the finance ministry told New Age.
The capital expenditure like automation or upgrading bank branches with modern equipments, is, however, permitted, he added.
The finance ministry last month injected Tk 4,100 crore as recapitalisation fund to four SCBs in an effort to energise the ailing commercial banks that are plagued by loan scandals and soaring classified loans.
Of the Tk 4,100 crore, Agrani was given Tk 1,081 crore, Janata Tk 814 crore, Tk 1,995 crore to Sonali and Tk 210 crore to Rupali Bank Ltd.
The combined capital shortfall of four SCBs soared to Tk 8,863 crore as of last September.
The finance ministry officials said the banks concerned have to routinely let the ministry know about the utilisation of recapitalisation fund and keep on improving their banking operations along with reducing the non-performing loans.
The International Monetary Fund in November asked the finance ministry to strengthen its monitoring on SCBs before and after giving the banks with recapitalisation funds.
In line with the recommendations of the multilateral lending agency, the finance ministry last month issued directives to SCBs to improve their banking portfolio.
The banks have to revise their separate credit and credit risk management policies, prepare their individual policies for implementation (process manual) of the core risk management guidelines with detailed roadmap, form core risk management committees comprising directors of the respective banks and devising their own internal control and compliance policies.
The latest directives, issued on Wednesday, said other than the purpose of recapitalisation, no other means of business activities of the banks could be pursued from the fund. Any sort of revenue expenditure is strictly barred, the directives added.
The planned automation programme of each bank to be financed from the recapitalisation fund must be okayed from the finance ministry, while the draft plan has to be submitted to the finance ministry latest by 15 of this month, the ministry order elaborated.
-With New Age input
