Five cash-strapped banks are likely to get nearly Tk 34 billion from the government coffer to meet their capital shortfall, officials said.
The badly-off state-owned banks (SoBs) are reportedly experiencing difficulties in running their day-to-day operation and foreign trade properly for the cash crunch.
Sources said in the budget for the current fiscal (2014-15) the government earmarked Tk 50 billion for recapitalising the state-run banks. During the July-December period of this fiscal, two SoBs were given Tk 15 billion as a refinancing dollop to restructure their shaken capital bases.
They said a recent meeting held at the bank and financial institutions division (BFID) decided to propose that the finance division divide the rest Tk 35 billion among five SoBs.
The bailout proposal -- which a policy researcher takes with a grain of salt -- will now be sent to the finance division in a day or two.
The meeting had decided to propose Tk 21.29 billion for Bangladesh Krishi Bank (BKB) against its capital shortfall of Tk 66.43 billion, for BASIC (Bangladesh Small Industries and Commerce Bank Ltd) Bank Tk 9.61 billion against Tk 22.23 billion shortage, and Tk 2.83 billion for Rajshahi Krishi Unnayan Bank (RAKUB) against its Tk 8.84 billion capital shortfall.
Besides, Bangladesh Palli Sanchay Bank is proposed to be given Tk 1.25 billion as paid-up capital and Grameen Bank Tk 5.8 million for raising its capital against its share held by government.
"We are going to make the proposal for providing the funds to the banks since they are genuinely in need of money to run their day-to-day affairs," an additional secretary of the BFID told the FE about the bailout move.
He said in the past some of these SoBs were given funds for recapitalisation in line with the Basel-II requirement. "Hopefully, the finance division will consider our proposal."
Earlier at a meeting with the chief executives of SoBs, additional secretary of BFID Gokul Chand Das assured them about recapitalisation of the banks in phases so that those do not face difficulties in operation.
During the fiscal year 2013-14, the government in the first phase had pumped Tk 41 billion in recapitalisation fund into Sonali, Janata, Agrani and Rupali banks. In the second phase BKB, RAKUB, Bangladesh House Building Finance Corporation and Grameen Bank were given a total of Tk 3.09 billion to meet their capital needs.
During the July-December period of the fiscal year 2014-15, the scam-ridden Sonali and Basic banks were given Tk 15 billion to help them restructure their capital base.
Chairman of Policy Research Institute (PRI) Dr Zaidi Sattar sees the recapitalisation move as wastage of public money.
It seems that the public money is being put in a financial "black hole in the name of recapitalisation of banks repeatedly", the policy analyst told the FE Tuesday when contacted for his opinion about the government step.
"In the recent years we saw the public money finally channelled to the wrong hands through corruption. It's not justified at all," he said.
Terming it as misallocation of resources Dr. Sattar said the funds could have been invested in other development sectors if repeated recapitalisation of banks were not needed.
"The scams in banking sector have adverse impact on overall economy of the country," he noted.
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