The government after its initial reluctance has provided the scam-hit BASIC Bank Limited with Tk 12 billion more for meeting its capital shortfall, officials said.
"We've replenished the capital base of the state-owned commercial bank (SoCB) to restore its reputation through improving balance sheet position," a senior official of the Ministry of Finance (MoF) told the FE on Sunday.
He also said the ministry has already disbursed the fund to the public sector bank.
"The fund will not be used for any other purpose barring its recapitalisation," he added.
The government's latest measure came against the backdrop of rising trend in capital shortfall of the scam-hit SoCB recently.
The bank's capital shortfall rose to Tk 29.91 billion as on September 30, in line with the Basel-III standard, from Tk 29.16 billion three months ago, according to the central bank's latest statistics.
Bangladesh started implementing Basel-III for calculation of capital-to-risk weighted assets ratio (CRAR) of all banks from first quarter (Q1) of the last calendar year for ensuring stability in the banking sector.
Talking to the FE, BASIC Bank Chairman Alauddin A Majid said: "We'll invest the fund only in the government securities, including the treasury bonds and bills, to avoid any risk."
He also said the fund will help the bank to improve its financial health.
Both the MoF and the Bangladesh Bank (BB) will expedite their monitoring for ensuring proper use of the fund.
"We'll strengthen our supervision to improve financial health of the SoCB through ensuring proper use of the recapitalisation fund," a BB senior official told the FE.
BASIC Bank had received Tk 11.90 billion in the last financial year (FY), 2014-15, on the same ground.
The government earmarked Tk 50 billion for recapitalisation of public sector banks and others in the current FY, 2015-16.
"The capital base of BASIC Bank deteriorated substantially, as its provisioning shortfall increased following a sharp fall in quality of assets," another BB official explained.
The bank's provisioning shortfall rose to Tk 17.23 billion in the third quarter (Q3) of 2015 from Tk 16.91 billion in the preceding quarter, while the amount of classified loans reached Tk 41.46 billion from Tk 43.07 billion, the BB data showed.
"BASIC Bank will have to expedite loan recovery drives to improve its capital base further," the central banker noted.
People familiar with the developments said the trouble-torn bank had desperately sought the money from the public exchequer to recoup its capital shortfall.
The SoCB faced image crisis in the global arena after financial irregularities, involving around Tk 45 billion, were detected in giving loans by its three branches -- Gulshan, Dilkusha and Shantinagar -- in Dhaka by the central bank between 2009 and 2013, they added.
BB earlier found different types of irregularities by BASIC Bank in providing loans, including non-verification of customers' creditworthiness, absence of Know Your Customer (KYC) procedures, and extending loans to defaulters.
siddique.islam@gmail.com
BASIC Bank gets Tk 12b to meet capital shortfall
Siddique Islam | Published: January 04, 2016 00:00:00 | Updated: February 01, 2018 00:00:00
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