Capital base of the country's banking sector increased by nearly 2.0 per cent in the third quarter of this calendar year despite a large shortfall in some 'badly-managed' banks, particularly state-run ones.
Total eligible capital, generally known as actual capital of the country's banking sector, rose to Tk 649.33 billion during the July-September period of the current calendar year from Tk 636.94 billion in the previous quarter of the same year, according to the central bank statistics.
"We're working to keep the rising trend of the capital base in the banking sector continue," SK Sur Chowdhury, deputy governor of the Bangladesh Bank (BB), told the FE Thursday.
He also said the overall capital adequacy ratio (CAR) of all banks will improve in the coming months if the government injects fresh fund to minimise capital shortfall of the state-owned banks.
The CAR of all banks came down to 10.57 per cent in the Q3 of this year from 10.68 per cent a quarter ago, the BB data showed.
The CAR of all banks will hit around 12 per cent during the period under review if the figures of two specialised banks -Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) - are excluded, according to the BB officials.
The aggregated capital shortfall of BKB and RAKUB rose to Tk 67.41 billion in the Q3 of this year from Tk 65.48 billion in the Q2 of 2014.
Eight commercial banks faced a shortfall of capital in the Q3 of the current calendar year mainly due to the higher volume of non-performing loans (NPLs).
The overall capital shortfall of the banking sector rose to Tk 10.96 billion in the Q3 of this calendar year from Tk 8.48 billion in the previous quarter of the same year.
One state-owned commercial bank (SoCB), three private commercial banks (PCBs), one foreign commercial bank (FCB) and three development finance institutions (DFIs) were on the list of those facing the capital shortfall during the Q3 of 2014.
"Higher classified default loans have led to a rise in provisioning requirements, which ultimately prompted their capital shortfall," another BB official explained.
The volume of classified loans rose to Tk 572.91 billion in the July-September period of 2014 from Tk 513.44 billion in previous quarter of this calendar year. It was Tk 481.72 billion in the Q1 in 2014.
The central bank earlier fixed the CAR at minimum 10 per cent considering the country's overall risk factors in the banking sector.
Under the Basel-II provision, the standard requirement of the CAR is minimum 8.00 per cent.
Bangladesh is now implementing the Basel-II accord to consolidate the capital base of banks in line with the international standards.
It has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.
Three types of risks - credit risk, market risk and operational risk - have to be considered under the minimum capital requirement.
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