MoF plans to hike paid-up capital of Ansar-VDP Bank

FE Team | Published: March 29, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

Nazmul Ahsan
The government plans to increase the paid-up capital of Ansar-VDP Development Bank from current Tk 400 million to Tk 1.0 billion and amend the charter of the specialized bank allowing it to do general banking, a top official in the Ministry of Finance (MoF) said. Finance Minister AMA Muhith has asked the Bangladesh Bank (BB) to go by the instructions immediately so that the bank becomes more functional and faces no liquidity crisis afresh. Muhith in his directives to BB, said the paid up capital of Ansar-VDP Development Bank be raised to Tk 1.0 billion through increasing the government share and by doubling the face value of each share held by Ansar-VDP members on the bank. "If necessary, step like bringing amendment to the act (Ansar-VDP Development Bank Act, 1995) may be considered," reads the directive of Muhith, sent to BB Governor Atiur Rahman last week. Muhith in his instructions also asked BB to take steps to expand the purview of the bank in collecting deposits beyond the Ansar-VDP members. "Their (Ansar-VDP Development Bank) problem is that they cannot collect deposit forcing the Bank to borrow money from other sources at high interest rates. The initiative of the Bank in collecting deposits has to be expanded," Muhith said further. The government established Ansar-VDP Development Bank in November, 1996 under Ansar-VDP Development Bank Act, 1995. According to the Act, the Bank cannot collect deposits other than from Ansar-VDP members. The government poured capital worth Tk 125 million and the rest Tk 275 million was injected by Ansar-VDP members on Tk 400 million paid-up capital of the Bank, when it was established as specialized bank. The members of Ansar-VDP bought each share of the bank at Tk 100. "The finance minister is of the view that the members of Ansar-VDP now could buy each share of the Bank at Tk 200 to increase the paid-up capital, while the government will inject the remaining amount to increase the Bank's paid-up capital to Tk 1.0 billion," a high official in the MoF said. "We are expecting the details of modalities from central bank soon to revamp the ailing Bank based on the directives of finance minister," he added. Asked, a high official in the Ansar-VDP Bank said they had demanded inclusion of the Bank under the Bank Company Act, 1991 so that general banking becomes legitimate for it through collecting deposits from masses. Besides, giving the bank with immunity from paying taxes is other demand, he added. Presently, the Bank has 150 branches across the country employing about 600 staffs against 1045 approved posts. The Bank, since its operation in 1996, became a profitable entity in 2002 for the first time. The trend continued till 2009. However, it lost its profit earning status in the previous year as it paid about Tk 130 million in corporate taxes and another Tk 128 million as dividend to its share holders, a top banker of Ansar-VDP said. He said the Bank cannot lend money due to liquidity crises and has become crippled as it cannot collect deposits from general people.