State-backed Rajshahi Krishi Unnayna Bank has sought around Tk 6.30 billion to shore up its cash and get back the money the bank spent on interest waiver of farm loans, officials said.
Of the total amount, the officials said Tk 4.30 billion is for recapitalisation of the regional bank in line with the Basel II requirement, while the rest Tk 2.03 billion is against the interest the bank waived on the government's order.
Officials said the government has recently raised the capital of the bank to Tk 10 billion from Tk 7.50 billion, after enacting the Rajshahi Krishi Unnayan Bank Act, 2014 amending the previous Rajshahi Krishi Unnayan Bank Ordinance, 1986.
In a recent letter to the ministry of finance, managing director of RAKUB Manjur Ahmed said presently, the bank has paid up capital of Tk 5.70 billion. It needs another Tk 4.30 billion to meet the capital requirement.
According to the RAKUB boss, the capital gap of the bank has now reached Tk 8.84 billion, of which Tk 6.48 billion is against risk weighted assets and Tk 2.36 billion against provision shortfall of other assets of the bank.
A senior finance ministry official said the bank brought down the operating loss to Tk 70 million in fiscal year 2013-14 from Tk 275 million a year earlier. Its net loss also fell by Tk 147 million in fiscal year 2013-14, compared with the previous year.
The troubled loan of the bank has come down to 33 per cent in the same fiscal, from 36 per cent the year before.
"The bank will be able to earn profit if the current trend of business continues," Mr Ahmed said in the letter, adding that the bank earned Tk 7.3 million as profit during the first half of the current fiscal year.
In another letter, the RAKUB managing director said the government needs to repay Tk 2.03 billion to the bank against interest waiver to borrowers. Since 1972 ,the bank had to waive Tk 5.15 billion on a government decision to waive a portion of interest, whose loan amount of up to Tk 0.3 million has become doubleed.
He said the central bank has been asking RAKUB to keep provision against Tk 2.03 billion the government owes to the bank.
"The bank's financial base will be strong if the government provides the Tk 2.03 billion and be helpful for disbursement of farm loan alongside carrying out other business activities," Mr Ahmed added.
Established in 1986, the state-owned specialised bank with 377 branches in Rajshahi and Rangpur division, it extends financing to the agricultural activities, such as crop production, fisheries, animal resource, irrigation equipment and farm machinery, crop processing and marketing, agro-industries and agri-business.
Until January this year, the bank has outstanding loan worth Tk 41.65 billion and the number of borrowers reached 0.86 million.
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