Dhaka, Bangladesh (BBN)- Bangladesh government is set to slash its budgetary allocation for recapitalizing the state-owned banks’ (SoBs) by 60 per cent for the next fiscal year (FY) 2016-17.
The allocation for the SoBs is to come down to BDT 20 billion in the FY 17 from BDT 50 billion for the FY 16, according to the proposed budget documents.
The ministry of finance has already revised such an allocation to Tk 18 billion from the original budget estimation of Tk 50 billion, the documents showed.
Six SoBs out of total eight faced capital shortfall amounting to BDT 134 billion as on December 31 last year in line with the Basel-III standard, a senior official familiar with latest development told BBN in Dhaka.
Bangladesh started implementing the Basel-III for calculation of capital-to-risk weighted assets ratio (CRAR) of all banks from the first quarter of 2015 aiming to consolidate the stability in the banking sector.
“It’s a warning for the SoBs for taking effective measures to meet their capital shortfall with own resources,” the official explained. "The state banks have faced a shortfall of capital mainly due to higher volume of their classified loans.”
BBN/SSR/AD