The allocation for state-owned banks' recapitalisation is set to fall by 60 per cent for the next fiscal year (FY) 2016-17 compared to the original budget for the outgoing fiscal.
The allocation for the SoBs is to come down to Tk 20 billion in the FY 17 from Tk 50 billion for the FY 16, according to the proposed budget documents.
The ministry of finance has already revised such an allocation to Tk 18 billion from the original budget estimation of Tk 50 billion, the documents showed.
"It's a signal for the SoBs to meet their capital shortfall with own resources," a senior official familiar with the latest development told the FE Thursday.
He also said six SoBs out of total eight faced capital shortfall amounting to Tk 134 billion as on December 31 last year in line with the Basel-III standard.
"The state banks have faced a shortfall of capital mainly due to higher volume of their classified loans," the official noted.
Bangladesh started implementing the Basel-III for calculation of capital-to-risk weighted assets ratio (CRAR) of all banks from the first quarter of 2015 aiming to consolidate the stability in the banking sector.
"We believed that most of the SoBs would be able to meet their capital shortfall with their own resources if they are sincere," the official explained.
He also said the SoBs may easily expedite their business activities using their countrywide large network.
Earlier on January 3 last, the scam-hit BASIC Bank Limited received Tk 12 billion again for exclusively meeting its capital shortfall.
Besides, the state-owned commercial bank had received Tk 11.90 billion in the past financial year on the same ground.
The government had expended Tk 26.17 billion to meet the capital shortfall of the SoBs in the FY 15, the budget documents showed.
The central bank is now unwilling to play any effective role for further injection of public money to meet capital shortfall of the public banks.
Talking to the FE, a senior official of the Bangladesh Bank (BB) said the central bank did not recommend injection of taxpayers' money in the last one year to meet capital shortfall of the SoBs.
"We're now advising the SoBs to meet their capital shortfall with own initiatives," the central banker explained.
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