Banks’ capital base widens


The capital base of the banking sector widened 10.51 percent to Tk 71,754 crore in the fourth quarter last year from a quarter ago.

In the third quarter of July-September, it was Tk 64,933 crore, according to data from the central bank.

Bangladesh Bank said the capital base of the banking sector has expanded vastly in the last five years.

The capital rose as a big portion of the profit was transferred to capital, and provision shortfall came down, among other factors. “As a result, the banking system has become stronger,” it said in a statement yesterday.

As per international standards, a capital adequacy ratio (CAR) of 10 percent is required, but the CAR of Bangladeshi banks stood at 11.35 percent at the end of December, which was 10.57 percent three months earlier.

The CAR is the ratio of a bank’s capital to its risk weighted assets.

In December, banks had a surplus capital of Tk 4,069 crore, reversing from a deficit of Tk 1,096 crore in September.

If the specialised banks — Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank — are excluded, banks’ CAR would be 12.5 percent, the statement added.

Despite global recession, the banking sector’s capital base is steadily becoming strong, the central bank said.

In 2008, the banking sector’s total capital was Tk 20,578 crore under Basel-I standards. It went up by a staggering 249 percent or Tk 51,176 crore at the end of last year.

The central bank said Bangladesh has fully implemented Basel-II in order to strengthen the capital base of local banks in line with the international standards. Starting 2015, banks are preparing to maintain the capital requirement under Basel-III. BASEL-III is a global, voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity risk.