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Six public banks get fresh bailout fund

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04th-Jun-2018       
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Special Correspondent :
The government has approved Tk 2,000 crore fresh equity to six cash-strapped state-run banks to help meet their capital shortfall.
The equity will be made available for them from the FY 2017-18 budget for recapitalisation of banks.  
Officials said the Finance Division will release the fund next week in line with a proposal made by Bank and Financial Institutions Division (BFID) under the Ministry of Finance.
When contacted, Bank and Financial Institution Division's (BFID) Senior Secretary Md. Eunusur Rahman confirmed the development. "Public banks will get fresh recapitalisation fund as per the government plan to bolster their regulatory capital," he told The New Nation on Sunday.
"We made the proposal reviewing the demands of public banks and it has been approved," he added.   
Earlier, seven state-owned commercial and specialised banks such as Sonali, Janata, Rupali, BASIC, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank (RAKUB) had approached the BFID for Tk 20,398 crore in government's bailouts funds because of capital shortfall caused by unbridled lending that resulted in record non-performing loans in public sector banks.
Among them, scam-hit Sonali, Janata and BASIC Bank sought Tk 11,000 crore bailout funds to meet their capital shortfall.
Md. Eunusur Rahman said, "They will get the bailout funds  on strict conditions to avoid a repeat of unbridled lending. They have been asked to initiate prompt corrective measures to improve their performance that has slipped due to a pile-up of bad debt."
He said the government decides the mode of recapitalisation the state-run banks to help them meet their equity requirements and enable them to run normal business.
Officials said Sonali, Janata and Bangladesh Krishi Bank will receive Tk 400 crore each fresh recapitalisation fund from the budget cake, while BASIC will get Tk 300 crore and Rupali and Rajshahi Krishi Unnayan Bank (RAKUB) Tk 250 crore each.
As on December 2017, the aggregate capital shortfall of Sonali Bank stood at Tk 5,397 crore, Janata Tk 1,273, Rupali Tk 1,250 and BASIC Bank Tk 2,500 crore.
Specialised banks such as Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank were facing capital shortfall of Tk 7,540 crore and Tk 800 crore respectively.
The government had injected Tk 10,622 crore into the coffers of the state banks, the House Building Finance Corporation, private IFIC bank and Grameen Bank between the fiscal years (FYs) 2012-13 and 2016-17.
In the period, the scam-hit BASIC Bank got the highest amount of Tk 3,390 crore.

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