Kazi Zahidul Hasan :
State-owned Rupali Bank plans to raise its capital base through issuing right shares to comply with the Basel -III guidelines.
The cash-strapped state lender on Sunday made a proposal in this regard in a letter to Md. Ashadul Islam, Secretary of the Financial Institutions Division, Ministry of Finance, signed by its Managing Director Md. Ataur Rahman Prodhan
“Rupali Bank wants to raise its capital to Tk 2,500 crore from Tk 700 crore through issuing right shares which is necessary to comply with the Basel-III guidelines,” read the letter.
Bangladesh Bank (BB) has given directions to all banks to implement Basel-III from January 01, 2015 in phases and fully by January 01, 2019.
As per the guidelines, banks maintained 10 per cent of risk-weighted asset in 2015, and this would gradually go up to 18.88 per cent by 2018 and finally they will maintain 12.50 per in 2019 when full implementation of capital ratios will be executed.
“All the correspondent banks in the country have already moved to raise their capital base in light with the Basel-III guidelines. But Rupali Bank is lagging behind with them due to fresh capital injection,” according to the letter.
The letter also says that being a public bank, Rupali is supposed to open letter of credits (LCs) for Petroleum Corporation of Bangladesh, Power Development Board, Food Department, BCIC and many more state firms and the task will be very difficult if the capital base of the bank does not go up in line with BASEL-III guidelines. The bank may not be able to implement the BASEL-III guidelines if the core capital is not raised.
“So, it has intended to raise the core capital through issuing of right shares.”
As the bank is listed on capital market, it has to follow the rules of the Bangladesh Security of Exchange Commission to issue the rights shares.
“Rupali bank is now maintaining the lowest authorized capital among all the state-owned commercial banks which could affect its business expansion and foreign trade in future. Besides, a low capital base has led to a low-level single borrower exposure limit forcing the bank out of competition with other corresponding banks in the country,” according to the letter.
The authorized capital of Sonali is Tk 6,000 crore, Janata Tk 3,000 crore and Agrani Tk 2,500 crore.
Md. Ataur Rahman Prodhan, Managing Director of Rupali Bank Limited, could not be reached for comments.
Rupali Bank was listed on Dhaka Stock Exchange in 1985 and Chattogram Stock Exchange in 1995. It disbursed 24 per cent stock dividends to its shareholders in 2017.
