Capital shortfall of 20 banks has surged to Tk 1.72 lakh crore as on December last year due to sharp increase in defaulted loans in the banking sector.
State-owned Janata Bank reported the highest capital shortfall of Tk52,890 crore followed by Bangladesh Krishi Bank Tk18,188 crore, Union Bank stood Tk15,689 crore, First Security Islami Bank Tk13,991 crore, Islami Bank Bangladesh Limited Tk12,885 crore and National Bank Tk7,798 crore, according to Bangladesh Bank (BB).
Besides, Social Islami Bank reported Tk 11,708 crore capital shortfall, IFIC Bank Tk 9,000 crore, Rupali Bank Tk 5,100 crore, Padma Bank Tk 4,900 crore, Agrani Bank Tk 4,685 crore, Basic Bank Tk 3,150 crore, Global Islami Bank Tk 2,900 crore, Rajshahi Krishi Unnayan Bank Tk 2,400 crore, ICB Islamic Bank Tk 1,900 crore, Bangladesh Commerce Bank Tk 1,600 crore, Standard Bank Tk 1,500 crore, AB Bank Tk 500 crore, Al-Arafah Islami Bank Tk 250 crore and Habib Bank Tk 120 crore.
A central bank official said banks' capital shortfall is likely to increase further in the March 2025 because BB has tightened its provisioning requirements from March.
At the end of September 2024, banks reported Tk53,253 crore capital shortfall. However, the overall shortfall increased by Tk118,534 crore by the end of December last year, according to Bangladesh Bank report (BB).
At the end of December 2023, 10 private and public banks faced Tk39,655 crore capital shortfall.
Insiders said the amount of banks risk-based assets is increasing day by day following the record rise in banking sector's non-performing loans.
Overall defaulted loans in the country's banking sector surged by Tk1.34 lakh crore at the end of December 2024, reaching a total of Tk3.45 lakh crore. It now account for 20.2 per cent of the ntire banking sector's total loan portfolio.
According to Bangladesh Bank rules, scheduled banks must maintain a Minimum Capital Requirement (MCR) and a Capital Conservation Buffer (CCB) of 10 per cent and 2.5 per cent of their total risk-based assets, respectively, to operate. In addition to the risk-based capital adequacy in light of the Basel-III framework to maintain a proper balance between capital and liabilities, banks have been instructed to maintain a minimum Leverage Ratio (LR) of 3 per cent since 2015, which is to be gradually increased at an annual rate of 1.25 per cent from 2023 to 4 per cent in 2026.
Accordingly, scheduled banks were instructed to maintain a leverage ratio of at least 3.5 per cent for 2024. However, at least 20 banks could not maintain capital in the December quarter of last year in accordance with these rules. This list includes four state-owned, two specialized, 13 private and one foreign bank.
The Bangladesh Bank report shows that the aggregate CRAR of the banking sector stood at 3.08 per cent at the end of December, down from 6.86 per cent at the end of September 2024.
