Govt take initiative to meet capital shortfall

Kamruzzaman Bablu :
A large amount of funds have remained idle in the country’s banking sector, and are not being invested.
The government has decided to take initiative to meet the capital shortfall of Tk15,000 crore in the state-run banks.
Bank and Financial Institutions Division has come up with four different strategies to address the shortfall.
The Division has sent a summary of the strategies to Finance Minister AMA Muhith recently.
Bank and Financial Institutions Division said the capital shortfall can be met providing capital or issuing shares in the stock market.
The capital shortfall can also be addressed through cash payment from budget allocation.
However, the government has allocated Tk4,000 crore in the current fiscal year’s budget which is a scanty amount compared to Tk15,000 crore capital shortfall.
Also, the bonus shares can be issued from net profit in the state-owned banks to address the shortfall.
This system is “more acceptable for all though the state banks have not followed it for a long time,” said the Bank Division.
The Division said the shortfall from classified loans can be reduced as state banks’ capital shortfall are created mostly for putting the provision reserves against classified loans.
It said the state banks can issue bonds, but the government will repay interest and principal amount at the end of the duration of the bonds.
BASIC Bank and Rupali Bank requested the Banks Division to issue bonds in meeting their capital shortfalls.
The managements of the two banks said their overseas business operations have been hampered due to their capital shortfall.
The banks said they want fund to meet the capital shortfalls.
Bank Division sources said the capital shortfall of Sonali Bank is Tk2,606 crore, Agrani Bank Tk200 crore, Rupali Bank Tk1,053 crore, BASIC Bank Tk2,286 crore, BDBL Tk737 crore, Bangladesh Krishi Bank Tk7,485 crore and Rajshahi Krishi Unnayan Bank Tk705 crore.
“A large amount of funds have remained idle in the country’s banking sector, and are not being invested,” said Bank and Financial Institutions Division Secretary Enusur Rahman.
He said this is not the “appropriate management” of the banking sector funds. “Banks are not getting any profit from investment due to low interest rate,” secretary added.
In all of the state-owned banks except Bangladesh Development Bank Limited, the capital shortfall remained widening.
Besides, the two state-run banks – Sonali and Janata – recently showed they had used the government recapitalisation funds in complying with conditions.