Dhaka, Bangladesh (BBN)- Bangladesh's seven banks including five public ones have faced capital shortfall worth nearly BDT 154 billion in the second quarter (Q2) of this calendar year mainly due to higher classified loans.
Two state-owned commercial banks (SoCBs) –Janata and Agrani –came out from the list of capital shortfall banks during April-June period of this year mainly due to decrease their classified loans, officials said.
Earlier in the Q1 of this year, total capital shortfall of nine banks was Tk more than 165 billion.
Of the seven, three out of six SoCBs, two of 40 private commercial banks (PCBs) and two specialised banks (SBs) were included in the capital shortfall list.
Three SoCBs which are suffering capital shortfall are Sonali, Rupali and BASIC Bank Limited.
“Those banks faced capital shortfall mainly due to their higher non-performing loans (NPLs),” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN in Dhaka.
The banks had kept aside more money from their capital for maintaining provisioning requirement against their classified loans, he explained.
The overall capital shortfall of the six SoCB came down to BDT 46.55 billion in Q2 from BDT 59.66 billion in Q1 of this year. It was BDT 59.93 billion as on December 31, 2016.
However, the capital shortfall of two specialized banks – Bangladesh Kirish Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) stood at nearly BDT 80.30 billion in the Q2 of this year from around BDT 80.32 billion three months before. It was BDT 78.26 billion in the final quarter of last calendar year.
The capital shortfall of two PCBs –Bangladesh Commerce Bank Limited and ICB Islamic Bank Limited – came down to BDT 17.88 billion in the Q2 of 2017 from BDT 18.05 billion of the Q1 of this year. It was BDT 17.96 billion in the Q4 of 2016.
On the other hand, the overall CRAR of all the banks operating in Bangladesh rose to 10.86 per cent in the Q2 of this year from 10.68 per cent three months before. It was 10.80 per cent in the Q4 of 2016.
All PCBs’ CRAR was found on an average to be 12.18 per cent as on June 30 last while the CRAR of nine foreign commercial banks stood at 23.34 per cent.
The CRAR of six SoCBs stood at 6.99 per cent as on June 30 this year while the CRAR of two SBs were in negative territory at 32.76 per cent, the BB data showed.
Bangladesh started implementing the Basel-III for calculation of CRAR of all banks from Q1 of 2015 for consolidating stability in the banking sector.
Under a roadmap to comply with the Basel-III, the banks will have to maintain 11.25 per cent of CRAR including 1.25 per cent capital conservation buffer by the end of December 2017.
The CRAR remains unchanged at 10 per cent while 0.625 per cent capital conservation buffer has to be included each year.
The banks will have to maintain 11.875 per cent CRAR by 2018. Finally in 2019, it will hit the desired level of 12.50 per cent, according to the roadmap.
The Basel-III is a new global regulatory standard on banks’ capital adequacy and liquidity as agreed by the members of the Basel Committee on Banking Supervision.
The third of the Basel Accords was developed in response to deficiencies in financial regulation revealed by the financial crisis of late 2000s.
The Basel-III is set to strengthen bank capital requirements and introduce new regulatory requirements on bank liquidity and bank leverage.
BBN/SSR/AD