Govt goes tough on recapitalising state-run banks

Hasibul Aman

2nd July, 2019 09:14:44 printer

Govt goes tough on recapitalising state-run banks

In the wake of widespread criticism from various quarters, the government has now taken a tough and a welcome stance against recapitalising state-owned banks marred by capital crunch due to rising NPLs. 

Ministry of finance is likely to pump in Tk 200 crore to the state-run banks to meet the capital shortfall even though they had placed a much higher demand of Tk 19,000 crore, the ministry sources said.

This money will be given to retain the government’s ownership portion in Krishi Bank and Grameen Bank, they added. 

In the just concluded 2018-19FY, Tk 1,500 crore was set aside for recapitalising state-banks.  

Finance ministry officials said situation of the state-run banks did not improve even after recapitalising of the state banks every year with taxpayers’ money.

Instead of improving, the situation instead deteriorated, especially the BASIC and Janata banks’ which were now in its worst ever condition, they added.

In these circumstances, finance ministry took a stance not to pump more money into these banks to overcome the capital shortfall. 

Officials of financial institution division of finance ministry informed that four state-banks placed a demand of Tk 19,000 crore in February this year to meet their capital deficit.

Of the amount, Bangladesh Krishi Bank sought the highest amount of Tk 7,935.56 crore, while Janata Bank, which has highest amount of bad loans among state-banks, demanded Tk 6,000 crore.

BASIC Bank sought Tk 4,000 crore and Rajshahi Krishi Unnayan Bank (RAKUB) Tk 775 crore.

It won’t be possible for the finance ministry to provide the money as demanded by the banks as allocation in the budget was only Tk 1,500 crore, officials said. 

The financial institution department has already prepared a draft of money allocation for state-owned banks in FY2018-19.

According to the draft, Krishi Bank was supposed to get Tk 849 crore, RAKUB Tk 500 crore, Janata Tk 100 crore, BASIC Tk 50 crore.

However, providing the money fully depends on the will of finance ministry. 

“We’re not at all inclined to provide fund to the state banks. Earlier, we had provided Tk 10,000 crore for the purpose, but it failed to yield any results,” said an official seeking not to be named.

“We were not at all interested to provide any money this year for the purpose. But at the last moment we decided to provide Tk 200 crore,” he added. 

Finance ministry data suggest that in the last four years, the government pumped into Tk 10,666 crore in this regard with BASIC Bank receiving the highest amount of Tk 3,390 crore.

Sonali Bank got Tk 3,003 crore, Agrani Bank Tk 1,081 crore, Janata Bank Tk 814 crore, Krishi Bank nearly Tk 730 crore and Rupali Bank 310 crore.