Tk 50b ‘bail-out’ package for state-run banks in FY ‘16

The government has allocated Tk 50 billion as 'bail-out' package for the state-owned commercial and specialised banks in the budget for the next fiscal year (FY) 2015-16, to be placed before parliament on June 4.

The 'bail-out' provision in the national budget began since the Hall-Mark scam in the state-owned Sonali Bank Limited.

Hall-Mark Group swindled Tk 35 billion from the largest state-owned bank that caused its capital shortfall.

The bank-wise allocation of the Tk 50 billion fund has not been elaborated, and capital injection to each of the banks will be decided later.

However, this type of allocation in the form of 'bail-out' for the state-owned financial organisations has frustrated many policymakers, as it is now becoming a regular phenomenon in the budget.

"We're really frustrated with the provision. It is now becoming a regular phenomenon in the annual budget. We're keeping this option since the Hall-Mark scam with Sonali Bank," said a senior official at the Finance Division.

He said the 'bail-out' cannot be a regular measure, as it will patronise inefficiency and corruption in the state-owned banks as well as cause abuse of public money.

The Tk 50 billion fund will be disbursed mainly as recapitalisation for the state-owned banks. But if any natural debacle occurs to the economy, a portion of the fund might be used to offset its impact, officials concerned told the FE.

They also said small investors, affected by the last stock market debacle, would also get financial benefits from the fund.

Small-sized specialised banks, like - Rajshahi Krishi Unnayan Bank (RAKUB), Bangladesh Krishi Bank and Karmasangsthan Bank, also get capital support from such fund.

However, state-owned Sonali and three other commercial banks did not seek any capital assistance from the government for the next FY, which indicates their 'improvement'.

On the other hand, Basic Bank Limited that is also involved in a number of scams has sought much, as its capital is squeezing following provisioning of loans, the officials told the FE on Monday.

The government also kept Tk 50 billion in the current FY 2014-15, for the same purpose.

Out of the amount, the Finance Division has disbursed nearly Tk 30 billion in favour of the state-owned banks, as of May 20.

Basic Bank got a total of Tk 12.9 billion in the fiscal, which is 25.80 per cent of total Tk 50 billion recapitalisation fund. The bank sought Tk 20 billion more.

Sonali Bank, the largest state-owned bank, got Tk 7.10 billion or 14.2 per cent of the Tk 50 billion 'bail-out' package in the FY 2014-15.

Of the total Tk 30 billion disbursement, the affected small investors received Tk 3.0 billion.

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