Business Desk :
Bangladesh Krishi Bank (BKB) mulls to issue bonds while Rajshahi Krishi Unnayan Bank (Rakub) seeks government funds as the state lenders’ capital shortfalls have been on the rise.
At the end of June this year, BKB’s deficiency in minimum capital requirements stood at Tk11,844 crore, which was 40% of the capital to risk weighted assets ratio (CRAR). The figure was Tk10,318 crore as of the corresponding month last year, according to Bangladesh Bank data.
For Rakub, the shortfall increased to Tk1,506 crore, a 17% of CRAR, from Tk1,338 crore the previous year. The capital shortfalls of the two banks have been on the rise for a long time.
BKB Managing Director Shirin Akhter and Rakub Managing Director Md Ismail Hossain discussed the matters with the central bank at a meeting on Thursday last week, in which Bangladesh Bank Governor Fazle Kabir, deputy governor Kazi Sayedur Rahman, and Department of Off-site Supervision Executive Director Ahmed Ali, among others, were present.
“We submitted a proposal to the finance ministry seeking an increase in our paid-up capital. Besides, we also sought low-cost funds from the government,” Ismail Hossain told.
He hoped that the government would grant those, and they would be able to minimise their capital shortfall.
A senior BB official, seeking anonymity, said the governor asked managing directors of the banks how they would cut down their capital shortfall.
In response, the BKB managing director said they were planning to issue bonds on the finance ministry’s approval.
Researchers and economists, however, did not appreciate the initiatives with which the two state lenders were moving.
“Issuing bond, and seeking funds are absolutely a sign of their inefficiency,” Executive Director at the Policy Research Institute (PRI) Ahsan H Mansur said.
“They are disbursing loans, then why they cannot realise those,” he raised questions.
If the government provides them with the facilities it would just minimise their capital shortfall on paper, he said, adding that they (the two banks) were not with the nature of business.
