Dhaka, Bangladesh (BBN)- Capital base of the country’s banking sector increased by nearly 2.0 per cent in the third quarter (Q3) of this calendar year despite a large shortfall in some ‘badly-managed’ banks, particularly state-run ones.
Total eligible capital, generally known as actual capital of the banking sector, rose to BDT 649.33 billion during the July-September period of the current calendar year from BDT 636.94 billion in the previous quarter of the same year, according to the central bank statistics.
“The central bank is working to keep the rising trend of the capital base in the banking sector continue,” a senior official of the Bangladesh Bank (BB), told BBN in Dhaka without elaborating.
The capital adequacy ratio (CAR) of all banks came down to 10.57 per cent in the Q3 of this year from 10.68 per cent a quarter ago, the BB data showed.
The central banker also said the overall CAR of all banks will improve in the coming months if the government injects fresh fund to minimise capital shortfall of the state-owned banks.
However, eight commercial banks faced a shortfall of capital in the Q3 of the current calendar year mainly due to the higher volume of non-performing loans (NPLs).
The overall capital shortfall of the banking sector rose to BDT 10.96 billion in the Q3 of this calendar year from BDT 8.48 billion in the previous quarter of the same year.
One state-owned commercial bank (SoCB), three private commercial banks (PCBs), one foreign commercial bank (FCB) and three development finance institutions (DFIs) were on the list of those facing the capital shortfall during the Q3 of 2014.
The central bank earlier fixed the CAR at minimum 10 per cent considering the country’s overall risk factors in the banking sector.
Under the Basel-II provision, the standard requirement of the CAR is minimum 8.00 per cent.
Bangladesh is now implementing the Basel-II accord to consolidate the capital base of banks in line with the international standards.
It has been prepared on the basis of three pillars: minimum capital requirement, supervisory review process and market discipline.
Three types of risks – credit risk, market risk and operational risk – have to be considered under the minimum capital requirement.

BBN/SSR/AD-21Nov14-12:43 am (BST)