Bailout to continue for state-run banks | 2019-06-09 | daily-sun.com

Bailout to continue for state-run banks

Jannatul Islam

8th June, 2019 10:35:11 printer

The government will continue to inject fund into the state-run banks from revenue budget to manage the capital shortfall of the financial institutions.

Finance Minister AHM Mustafa Kamal will unveil the proposed budget for 2019-20 at a cost Tk 5,24, 950 crore on June 13.

The state-run banks will get around Tk 1500 crore in 2019-20 budget against the request for Tk 24,711  crore (247.11 billion) for the purpose.

In the last ten years from 2009-10 to 2018-19 fiscals, a total of Tk 18,000 crore budgetary allocation was made to the state-owned banks to cover the bank's deficit.  Of this, the highest allocation was made in 2013-14 to the tune of Tk 5,068 crore.  The total capital shortfall in six banks is now Tk 25,130 crore till last December, according to the Finance Division.  The banks receiving funds include Sonali, Janata, Rupali, Agrani, BASIC, Bangladesh Development Bank and two specialised banks -- Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank.

The central bank data shows that Bangladesh Krishi Bank had the highest capital shortfall at Tk 8,447crore, followed by Janata Bank Tk 5,855crore, Sonali Bank Tk 5,320 crore, Basic Bank Tk3394 crore, ICB Islami Bank Tk 1,552 crore, Agrani Bank Tk 883crore and Rajshahi Krishi Unnayan Bank Tk 712crore.  Although there are no major loan scam and default loans, a huge capital deficit of the government banks looks quite unjustified. But almost every government bank has sent letters to the Finance Ministry for budgetary allocation to overcome their capital deficit separately in the budget.

The banks have demanded a total allocation of Tk 24,711 crore to overcome their capital shortfall. On the contrary, the government is reportedly allocating Tk1500 crore in the next budget to show the huge mismatch.

Meanwhile, Bangladesh Bank has recommended allocation of necessary funds to banks to handle their capital shortfall.  Bangladesh Bank former Governor Salahuddin Ahmed said the fund allocation for managing capital shortfall becomes a tradition.

"The budget should have a clear outline of how to raise private sector investment. Liquidity crisis in banks and moreover excessive government borrowing are edging out private sector from having enough capital for funding new projects,” Prof Saleh Uddin told the daily sun.


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