Rupali Bank urges govt to settle SoE loans
Tuesday, 4 May 2010
FE Report
Rupali Bank has urged the government to defray the overdue loans of State-owned Enterprises (SoEs) of Tk 6.77 billion to clear its balance sheet and strengthen its capital base.
The bank had a provisional capital shortfall of Tk 12.79 billion at the end of December last year.
"We want to restructure and inject new capital to make it a healthy bank," said a finance ministry official.
Under Basel II agreement, the bank must have a strong capital base to sustain in the competitive business environment, he said.
"The government is planning to issue bonds against the loans of SoEs as the bad debts weaken the financial statements," he added.
The bonds will mature after several years but it will clean the balance sheet of the bank, the official said.
The bank will not need to keep Tk 2.34 billion as provision against bad debts of the SoE loans to improve its financial statements, he said.
The finance ministry has sought the opinion of Bangladesh Bank in this regard upon which the government will take the final decision, he added.
Rupali Bank, once put under the Privatisation Commission for selling of 93 per cent of government stake to the private sector, is trying hard to get back to business.
The government has recently withdrawn the condition imposed on the bank regarding lending and recruitment, said a bank official.
"We have started recruiting officials as the bank is facing acute manpower shortages," he said.
It is upgrading its automation system and training officials to turn it into a modern bank, he added.
The government owns 94.55 per cent and general investors 5.45 per cent of the bank, according to the DSE website.
The z category bank's share price dropped by Tk 48 to Tk 1417 at close on the DSE Sunday.
Rupali Bank has urged the government to defray the overdue loans of State-owned Enterprises (SoEs) of Tk 6.77 billion to clear its balance sheet and strengthen its capital base.
The bank had a provisional capital shortfall of Tk 12.79 billion at the end of December last year.
"We want to restructure and inject new capital to make it a healthy bank," said a finance ministry official.
Under Basel II agreement, the bank must have a strong capital base to sustain in the competitive business environment, he said.
"The government is planning to issue bonds against the loans of SoEs as the bad debts weaken the financial statements," he added.
The bonds will mature after several years but it will clean the balance sheet of the bank, the official said.
The bank will not need to keep Tk 2.34 billion as provision against bad debts of the SoE loans to improve its financial statements, he said.
The finance ministry has sought the opinion of Bangladesh Bank in this regard upon which the government will take the final decision, he added.
Rupali Bank, once put under the Privatisation Commission for selling of 93 per cent of government stake to the private sector, is trying hard to get back to business.
The government has recently withdrawn the condition imposed on the bank regarding lending and recruitment, said a bank official.
"We have started recruiting officials as the bank is facing acute manpower shortages," he said.
It is upgrading its automation system and training officials to turn it into a modern bank, he added.
The government owns 94.55 per cent and general investors 5.45 per cent of the bank, according to the DSE website.
The z category bank's share price dropped by Tk 48 to Tk 1417 at close on the DSE Sunday.