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SoBs want bailout fund

Rupali Bank seeks Tk 932 cr

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Kazi Zahidul Hasan :
State-owned Rupali Bank has sought for Tk 932.72 crore bailout fund from the government to replenish its capital shortfall following the suit of two other state lenders.
It came up with the move in a letter to the Senior Secretary of the Bank and Financial Institutions Division (BFID) under the Finance Ministry on Tuesday.
Last week, Sonali and BASIC Bank sought for fresh government funds in a similar manner for exclusively replenishing their waning capital.
Sonali Bank sought Tk 6,000 crore as fresh fund, while scam-hit BASIC Bank Tk 2,500 crore. Both the banks earlier suffered from huge loan scandals crippling their financial health consistently.
Officials of the banks said they needed immediate recapitalisation by the huge amount to boost their capital base, restore depositors' confidence and maintain minimum capital in line with Basel-III norms.
 "We sought the recapitalisation fund to address the bank's capital shortfall as well as maintain capital adequacy ratio (CAR) in line with BASEL-III guideline," a Senior Rupali Bank official told The New Nation, asking not to be named.
He said, BASEL-III guideline is a global standard on the regulatory capital requirements for banks. The central bank has adopted the norm making it mandatory for all commercial banks in Bangladesh, including state-owned lenders.
As of September last year, BASIC Bank reported Tk 3,279 crore capital shortfall, Sonali Bank Tk 3,140 crore and Rupali Bank Tk 689.89 crore capital shortfall.
 "Poor performance of the public banks over the years have led to significant capital erosion requiring for further capital injection both for replenishment of their capital shortfall and strengthening core activities," a Senior BFID official told The New Nation yesterday, preferring not to be named.
He said state-owed banks (SoBs) are now surviving on the huge bailout fund of the government. It has provided Tk 9,639 crore recapitalization fund to them over the last four years.
 "The government has also set aside Tk 2,000 crore in this purpose in the budget for current fiscal," he added
The BFID official further said the government is planning to inject fresh funds to cash-strapped state-owned banks that are badly hit by bad loans and financial irregularities.
 "The funds may be provided to them on stringent conditions and reforms in their governance system," he added.
When asked, the BFID official said, "We will prepare a summary for the Finance Minister seeking his consent in this regard."

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