Kazi Zahidul Hasan :
Sonali Bank Limited (SBL), the country’s largest public sector bank, has sought Tk 6,000 crore as fresh capital from the government to enable the bank to maintain a minimum Tier-I Capital to Risk Weighted Asset Ratio by this year.
The bank recently sent a proposal to the Finance Ministry’s Bank and Financial Institutions Division, seeking the recapitalisation fund.
At the end of September last year, SBL reported Tk 3,140 crore capital shortfall and it’s capital adequacy ratio stood at 3.26 per cent by this time which was far below the required 10 per cent of the Risk Weighted Asset.
The Risk Weighted Asset of the bank stood at Tk 46,617.89 crore as of September 30 last year, according to Bangladesh Bank (BB).
“The bank is now running with an alarming capital shortfall…It needs immediate recapitalisation,” a senior SBL official told The New Nation yesterday seeking anonymity.
According to him, the bank in its proposal showed alternative ways to raise Tk 6,000 crore for the bank. “The fund could be raised by selling shares or issuing recapitalization bonds or direct capital injection by the government,” he added.
He further said if the government approves the fund raising by selling shares or issuing bonds it would not go for injecting liquid fund to the bank.
“Bad loans piled up at the bank over the years forcing it to suffer an immense capital shortfall,” said the official, adding, “This pushed the bank to squeeze their lending capacity to productive sectors of the economy.”
The SBL official said the recapitalization is necessary to boost the bank’s capital base, restore depositors’ confidence and to follow the Basel-III guidelines. It will also help the bank to accelerate its lending activities to the productive economic sectors.
The government has provided Tk 9,639 crore to the state-owned banks as recapitalization fund over the last four years. In the current fiscal year (2017-18), Tk 2,000 has been set aside for the purpose.
The total default loans from six state-owned commercial banks stood at Tk 38,517 crore as on September last year from Tk 34,581 crore as on June 30 the same year, recording an 11.38 per cent rise.
Taking to The New Nation, a Finance Ministry official said the government is planning to inject fresh funds to state-owned banks that are weighed down by bad loans in a bid to stimulate the flow of credit to spur investment.
“The funds may be provided to them after applying stringent conditions. Reforms in the public banks’ governing systems will also put in place to improve their fianncail health,” he added.
When asked, he said, “We will seek approval on SBL’s funding mechanism from the government’s high-ups within the shortest possible time.”
