Capital shortfall in Rajshahi Krishi Unnayan Bank increased by 138.01 per cent to Tk 547 crore on December 31, 2012 from Tk 229.82 crore on June 30, 2012 due to its increased
trend in classified loan, said officials of the Bangladesh Bank.
The central bank on Monday warned RAKUB for its large amount of capital shortfall against the risks weight assets asking it to take necessary measures in the quickest possible time, they said.
The BB gave the instructions during a meeting with RAKUB with the central bank deputy governor Abu Hena Mohd Razee Hassan in the chair. The meeting was held at the BB headquarters in the capital.
The meeting reviewed the data till December 31, 2012 of the RAKUB as per the memorandum of understanding signed between the BB and the specialised banks.
A BB official told New Age on Monday that the required capital of the RAKUB was around Tk 400 crore but the bank’s shortfall had reached Tk 547 crore as of December 31, 2012.
He said that the clients’ money of any bank became ‘insecure’ if it had large capital shortfall.
The BB also warned RAKUB as the bank had failed to recover its default loans from the top 20 defaulters as per target set by the central bank for 2012, he said.
According to the meeting source, the BB had set a target for the bank to recover the default loans amounting to Tk 40 crore from the top 20 defaulters in 2012, but it (RAKUB) could realise only Tk 2.40 crore in the year.
The RAKUB also failed to realise the default loans from other defaulters in the last year when it recovered classified loans amounting to Tk 168 crore against a target of Tk 379 crore set by the central bank.
The BB data showed that the classified loans in the RAKUB stood at Tk 1,370.92 crore as of December 31, 2012 which was 37.09 per cent of total disbursed loan amounting to Tk 3,331.07 crore in the period.
The BB official said that the capital shortfall in the bank increased significantly in last year due to its huge amount of defaulted loans.
According to BB guideline, a bank has to keep at least 10 per cent capital against its risks weight assets.
Moreover, the RAKUB could not secure its required provision against its defaulted loan in last year, the official said.
The provision shortfall in the bank stood at Tk 244.10 crore as of December 31, 2012 although the RAKUB maintained the required provision in 2011.
Another BB official said that the central bank had asked RAKUB to prepare a business plan to tackle the ongoing crisis.
He said, ‘We asked the senior management of the bank to submit the business plan to the BB within May 20.’
The central bank observation witnessed that almost all branches of RAKUB were yet to be automated, he said.
The BB asked the bank to take steps to digitalise the branches as early as possible to prevent financial scams and crime, he said.
BB executive director Mohammad Naushad Ali Chowdhury and the RAKUB managing director and chief executive officer Md Mofazzal Husain and other senior
officials of the two institutions attended the meeting.
Earlier on Monday and last week, the BB held separate meetings with the managements of Bangladesh Krishi Bank and four state-owned banks asking them to take some immediate steps to improve their financial condition.
The central bank, under the memorandum of understandings signed with the SCBs and specialised banks, holds meetings with their managements in every three months to review their operations and give necessary instructions to ensure discipline and transparency in the banks.
-With New Age input
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