Capital shortfall in 10 banks stands at Tk 27000cr
The capital shortfall in the country's ten commercial banks now stands at around Tk 27,000 crore. The amount was Tk 7, 221 crore in the calendar year of 2018.
The unusual rise in total shortfall has exposed the bank sector to a serious trouble.
Analysts of the bank sector wonder why the government is failing to put brake on the faulty practices in which powerful people do not pay back after taking loans from banks mounting the size of default loans.
It is a big question that despite the government control of state owned banks why such anarchy is persistent in the sector, many point out.
Reports said many directors of private banks take loans breaking standard rules and without enough collateral. Failure to recover such loans is causing troubles.
Former Governor of the Bangladesh Bank Saleh Uddin Ahmed told the Daily Observer, the banking sector is facing many problems like capital shortfall and good governance due to interference of the Finance Ministry.
The government interference in private and government owned banks should be stopped.
He said operating cost of banks needs to be reduced. Banks will have to invest. Their non-performing loan will have to be recovered and utilized. The government should go tough on bank irregularities and restoring discipline in this sector.
The BB report said Agrani Bank, AB Bank and National Bank of Pakistan are having acute capital shortfall. But Rupali Bank and Padma Bank (Farmers Bank) have recently come out of the list of capital deficit situation.
Of the 10 banks, capital shortfall in scam-hit Janata Bank increased to Tk 5,694 crore, in 2017. It increased by Tk 161 crore alone the following year to mark the capital shortfall of Tk 5,818 crore at the end of December 2018.
The entire amount of about Tk 573 crore that Janata Bank gave out to five subsidiaries of Crescent Group became defaulted while AnonTeX failed to repay the bank loans worth more than Tk 5,500 crore aggravating the bank's liquidity crisis.
It appears that Janata Bank had concealed big default loans to cover its wrong doings. But new revelations showed it is suffering from severe capital shortfalls as it is failing to recover most of the default loans.
The government has recently injected Tk 100 crore to beef up its capital.
Another state-owned bank, BASIC Bank suffered a capital shortfall of Tk 738 crore in 2018 to add to a total capital shortfall of Tk 3,394 crore. The Finance Ministry has injected Tk 50 crore to temporarily improve its position.
Capital shortfall in Bangladesh Krishi Bank was Tk 670 crore in 2017 and it rose to Tk 8,447 crore at the end of December 2018.
Capital shortfall of Bangladesh Commerce Bank increased by Tk 138 crore to Tk 384 crore. ICB Islami Bank's provision shortfall increased to Tk 1,552 crore from Tk 1,495 crore. Capital shortfall in Sonali Bank and Rajshahi Krishi Unnayan Bank, however, declined to Tk 5,320 crore and Tk 712 crore respectively.
Agrani Bank's capital shortfall stood at Tk 883 crore at the end 2018. Banks are required to keep 10 per cent of their risk-based assets or Tk 400 crore, whichever is higher, from their capital. Any failure is considered as bank's capital shortfall.
Khondoker Ibrahim Khaled, former Deputy Governor of Bangladesh Bank, told the Daily Observer that state owned banks may have reason for capital shortfall but if private banks fail it fails because of faulty management. It is not acceptable, he said.