Eleven banks faced a capital shortfall of Tk 27,918 crore in September, revealing their fragile health.
The banks are Bangladesh Krishi, Sonali, Agrani, BASIC, Janata, Rupali, Rajshahi Krishi Unnayan, ICB Islamic, Bangladesh Commerce, Padma and AB Bank.
The corruption perpetrated in the banks is mainly responsible for the serious lack of capital.
Until September, Bangladesh Krishi Bank had the biggest shortfall of Tk 12,144 crore, up 12% from nine months ago, according to data from the Bangladesh Bank.
Sonali’s capital shortfall, however, decreased to Tk 2,633 crore from Tk 3,063 crore during the period.
The central bank should take immediate action to resolve the issue as such a situation sends a negative signal to the global community that the banking sector is weakening, a central bank official said.
Foreign companies primarily examine the capital base and non-performing loans of banks before making any investment decisions. So this level of capital shortage will put foreign investors at bay, the central banker said.
Although the banking sector posted a capital surplus in the third quarter, the amount shrank considerably due to the increase in defaulted loans.
The sector had excess capital of Tk 12,418 crore in September, down 22% from December of last year. NPLs totaled Tk 101,150 crore, up 14% from the same period a year ago.
Janata Bank’s capital deficit fell to Tk 1,416 crore from Tk 5,475 crore. A wide range of scams were responsible for the shortage at the state bank.
Md Abdus Salam, managing director of Janata Bank, said the shortfall would decrease next year as the lender’s operating profit rose.
Bank Agrani’s shortfall fell to Tk 2,463 crore in September from Tk 3,002 crore in December.
Mohammad Shams-Ul Islam, managing director of Agrani Bank, said public lenders should collectively make concerted efforts to reduce the deficit.
“We will soon make a proposal to the government to reduce the deficit,” he said, adding that the lender now provides 42 types of government services to people without charging a fee.
The government can issue a bond in favor of Banque Agrani so that it can adjust the securities with its capital, Islam said.
“This will help us improve the capital situation. In addition, we will repay the equal amount of the bond to the government when the instrument matures.”
Padma Bank’s capital shortfall stood at Tk 540 crore in September, an increase of 75% from nine months ago.
Md Ehsan Khasru, general manager of the private commercial bank, said the previous management and the board of directors had been involved in huge irregularities when granting loans.
“The current management is trying to improve financial health, and it usually takes at least five to six years to turn a weak bank into a good bank.”
âWe are now making efforts to attract foreign direct investment to strengthen the capital base. “
AB Bank’s capital deficit stood at Tk 355 crore in September, compared to a Tk 278 crore surplus in December.