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Tk 11,660cr injected into ailing public banks in six years

Economists insist on improving governance

By Special Correspondent
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The government continues to inject budgetary funds into ailing public banks despite criticism from various corners.

Official data show, public banks got Tk 11,660 crore in recapitalisation funds in the period stretching from 2011-12 to 2016-17 fiscal years.

The government has allocated Tk 341 crore and Tk420 crore recapitalisation funds to public banks in between 2011-12 and 2012-13 fiscal years. But the allocation surged to Tk 4,477 crore and Tk 2,617 crore in each of the following two fiscal years.

Besides, Tk 1,800 crore and Tk 2,000 crore were provided to public banks in the 2015-16 and 2016-17 fiscal years.

Criticizing such capital infusion programme, former Bangladesh Bank Governor Dr Salehuddin Ahmed told The New Nation yesterday that the government continued to recapitalise public banks although their performances had not improved. "Even, they are running with a high-level of non-performing loans (NPLs) and no drastic measure is in sight to recover such loans," he added.

Terming the government move "illogical," Dr Salehuddin said," It is nothing but wastage of taxpayers' money, which could have been invested in social sectors to improve the livelihood of people. Public money will be injected into the banks only if they go through drastic reforms."

The former BB governor observed that public banks are now operating with huge capital shortfall resulted from loan scams and the rising bad loans in their overall credit portfolios. This has weakened their financial health, created large-scale capital shortfall and squeezed profitability and ability to expand lending activities. "Public banks have already plunged into grave crisis owing to large amount of bad loans, poor governance and corruption. So, fresh capital injection without improving their governance and recovery of bad loans may not yield any positive result," Dr AB Mirza Azizul Islam, a former adviser to a  caretaker government, told The New Nation.

Such budgetary fund for the public banks is nothing but a drainage of taxpayers' money, he said, suggesting that the practice must be stopped for the best use of public money.

Both the economists urged the management of public banks to expedite loan recovery drive and reduce the amount of default loans to improve public banks’ financial health.

As on March 2017, seven public banks-Agrani, Janata, Rupali Sonali, BDBL, BASIC and BKB-had Tk14,700 crore capital shortfalls.

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