The government has increased the paid-up capital of the state-owned Bangladesh Krishi Bank (BKB) to Tk 15.5 billion to strengthen the bank's balance sheet.
The increase was materialised through conversion of the previously reserved recapitalization worth Tk 6.50-billion into permanent paid-up capital.
The Financial Institutions Division (FID) issued a circular to this effect recently.
The FID converted the previously held fund (Tk 6.5 billion) into paid-up capital as per the Article 04 of the Bangladesh Krishi Bank Order, 1973 (Presidential Order No. 27 of 1973), it was learnt.
The steps were aimed at strengthening the bank, which has been facing challenges including a large capital deficit and a high percentage of defaulted loans.
However, such a move has drawn sharp criticism from financial experts as they termed it as 'a cosmetic measure' that ignores the bank's deep-seated crisis of defaulted loans.
When contacted, a senior banker said while this action was necessary for an immediate uplift to the bank's statutory capital, a detailed analysis reveals it to be a fiscal restructuring of existing liabilities rather than a genuine solution to BKB's devastating financial health, which is plagued by massive non-performing loans (NPLs).
According to the available figures, BKB's overall capital shortfall stood at Tk 292.07 billion as of June 2025.
The Tk 6.5 billion capital increase addresses less than 2.3 per cent of the colossal capital shortfall the bank is currently grappling with.
The shortfall remains a critical threat to the bank's stability, he official said.
The primary cause of such a capital deficit is the bank's disastrous loan portfolio, which has recently seen a dramatic, but belated, recognition of actual bad debt.
The bank's NPL ratio ballooned to nearly 50 per cent (specifically, 49.44 per cent) of its total accumulated loans as of June 2025.
The bank's default loans amount to approximately Tk 175.38 billion, it was learnt.
Such a colossal figure indicates that nearly half of the loans disbursed by the specialised bank, which is mandated to serve the agriculture sector and food security, are non-performing and require provisioning, directly eroding the bank's capital.
The bank incurred net losses amounting to nearly Tk 191 billion over the past six fiscal years, with preliminary estimates suggesting another loss exceeding Tk 70 billion in the current fiscal year (FY) 2024-25).
Experts, however, identified a systemic governance problem, political interference in lending, and widespread management issues---including politically motivated transfers of staff--as the key reasons behind the bank's continuous financial problems.
They said the conversion of Taka 6.5 billion from a recapitalisation reserve to 'paid-up capital' is widely seen as a 'paper transaction'.
An official of the FID said the move highlights the government's commitment to keeping the state-run specialised bank buoyant, but it also underscores the growing burden BKB places on the national budget.
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