The finance ministry has decided to inject Tk 900 crore into six cash-strapped public banks suffering from huge capital shortfall.
The finance ministry officials said the move would shore-up the banks in the short-term amid soaring defaulted loans weighing down their normal banking operations.
A meeting on Wednesday, presided over by the finance division secretary of the finance ministry Mahbub Ahmed, decided to sanction the recapitalisation fund, against a demand of Tk 3,500 crore from the respective banks.
‘The recapitalisation fund of Tk 900 crore will be sanctioned within a couple of days as the beleaguered banks are mired in capital crunch,’ a senior official in the finance ministry told New Age on Thursday.
‘We cannot sanction Tk 3,500 crore as sought by the banks amid fund crisis after redirecting the public fund earmarked for recapitalisation purpose in the original budget to other sectors in the revised budget,’ the official added.
He, however, said the banks concerned have to implement a set of conditions to be attached to the utilisation of the proposed recapitalisation fund.
The banks concerned have a combined capital deficit of above Tk 10,500 crore as of April, this year.
The banks in red are Bangladesh Krishi Bank, Bangladesh Small Industries and Commerce Bank Ltd, Rajshahi Krishi Unnayan Bank, Bangladesh Palli Sanchay Bank, Karmasangsthan Bank and Ansar-VDP Unnayan Bank, sources said.
Of the approved bail out fund, Tk 400 crore will be released against BASIC, Tk 250 crore in favor of BKB against its capital shortfall of Tk 6,600 crore, Tk 75 crore for RAKUB against its Tk 890 crore capital shortfall, Bangladesh Palli Sanchay Bank to get Tk 125 crore and Karmasangsthan Bank and Ansar-VDP to get Tk 25 crore each.
The scam-ridden Sonali and Basic banks were given Tk 1500 crore in December as recapitalisation fund from the government to help
them restructure their capital base.
In last fiscal year, Sonali was recapitalised by Tk 1,995 crore, Rupali Tk 210 crore, and Agrani and Janata Tk 1,081 crore and Tk 814 crore respectively.
Another finance official said they would monitor the spending of the banks concerned more tightly, as the proposed fund is meant to improve their poor capital base.
The finance ministry officials concerned said the proposed fund cannot be utilised by the banks on the head of their revenue expenditure, but for capital expenditure like automation purposes only.
The banks have to obtain prior permissions from Bangladesh Bank before they spend the recapitalisation fund, they added.
The current budget has an allocation of Tk 5,000 crore in the head of ‘bank re-capitalisation’.