The capital shortfall in the second quarter increased by Tk770 crore
A total of 11 public and private banks fell into capital shortfall again at the end of the second quarter, even with all the Covid-19 facilities given by the government to the banking sector.
However, due to these facilities, the number of new loan defaulters has not increased.
According to international banking regulations (Basel III), these banks do not have the minimum required capital.
In the second quarter, the total amount of shortfall was Tk25,553 crore, which was Tk24,783 crore after the first quarter.
Meaning the total capital shortfall increased by Tk770 crore within three months.
Among the 11 banks with a capital shortfall at the end of the second quarter (April-June), seven are state-owned Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Agrani, Basic, Janata, Rupali and Sonali Bank.
Economist and financial adviser to the former caretaker government AB Mirza Azizul Islam said: “The main reason behind the capital shortfall of state-owned banks was loan irregularities as most of the bank loans have already defaulted.”
On the other hand, many deposits have been taken at high interest.
“I think Bangladesh Bank needs to be more vigilant not only in the case of state-owned banks but also in the case of private banks,” he added.
According to Bangladesh Bank, Bangladesh Krishi Bank had a capital shortfall of Tk11,843 crore, Sonali Bank Tk3,527 crore, Agrani Bank Tk 1,960 crore, BASIC Bank Tk1,927 crore, ICB Islamic Bank Tk1,642 crore, Rajshahi Krishi Unnayan Bank Tk1,506 crore, Bangladesh Commerce Bank Tk1,146 crore, Janata Bank Tk345 crore, Rupali Bank Tk667 crore, Padma Bank Tk661 crore and AB Bank Tk329 crore.
Among the private sector banks, AB, Bangladesh Commerce, ICB Islamic, and Padma Bank are in capital shortfall as well.
Padma Bank’s condition is deteriorating due to the irregularities and frauds in the loans taken from the bank since its inception.
Even after state-owned banks provided a capital of Tk715 crore to Padma Bank, the bank's financial condition has not improved.
Last month, Padma Bank applied to the government to merge with the government bank.
In addition, the Commerce Bank has also been in deficit due to loan fraud.
On the other hand, AB Bank's woes also increased due to offshore unit loan irregularities and local loan fraud.
Under global rules, banks now have to save extra provisions to deal with potential risks.
At the end of June, 18 banks in the country could not save additional provisions.