Tk 20b for recapitalisation of SoBs against Tk 147b shortfall

The budgetary allocation for state-owned banks' (SoBs) recapitalisation has remained unchanged at Tk 20 billion for the next fiscal year (FY) against capital shortfall of over Tk 147 billion.
The government was set to provide Tk 20 billion for recapitalisation of its commercial and specialised banks for the FY 2016-17. It was Tk 18 billion for the FY 16, according to the budget documents.
"The fund was allocated but yet to be disbursed for recapitalisation of SoBs," a senior official familiar with the latest developments told the FE Thursday.
He also said the fund will be provided to the SoBs by the end of this month.
Currently, seven SoBs, out of total eight, are facing capital shortfall amounting to Tk 147.02 as on March 30 last in line the Basel-III standard, according to the central bank's latest statistics.
"The public banks have faced the capital shortfall mainly due to higher growth of their non-performing loans (NPLs)," a senior official of the Bangladesh Bank (BB) told the FE while explaining main causes of the capital shortfall.
The central banker believed that most of the SoBs would able to meet their capital shortfall with their own resources if they are sincere.
He also said the BB did not recommend to the ministry of finance for injection of taxpayers' money in the last two years to meet capital shortfall of the SoBs.
"We've already advised the SoBs to meet their capital shortfall at their own initiatives," the central banker noted.
Bangladesh started implementing Basel-III for calculation of capital-to-risk weighted assets ratio (CRAR) of all banks from the first quarter of 2015 aiming at consolidating stability in the banking sector.
The CRAR remains unchanged at 10 per cent while 0.625 per cent capital conservation buffer has to be included each year.
Under a roadmap to comply with the Basel-III, the banks will have to maintain 11.25 per cent of CRAR including 1.25 per cent capital conservation buffer by 2017.
The banks will have to maintain 11.875 per cent CRAR by 2018. Finally in 2019, it will hit the desired level of 12.50 per cent, according to the roadmap.
The Basel-III is a new global regulatory standard on banks' capital adequacy and liquidity as agreed by the members of the Basel Committee on Banking Supervision.
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