Dhaka, Bangladesh (BBN)-Capital base of all the state banks shrank further in the second quarter (Q2) of this calendar year mainly due to further deterioration in the quality of their assets, officials said.
The capital shortfall of all eight state-owned banks had increased by more than 21 per cent to BDT 128.58 billion in the Q2 of 2015 from BDT 105.89 billion in three months ago, according to the central bank’s latest statistics.
“The quality of assets of the public sector banks has been deteriorating continuously for lack of due diligence and internal control and compliance (ICC),” a senior official of the Bangladesh Bank (BB) explained.
He also said the central bank has started holding meetings with the boards of the banks to improve the situation. “So far we have sat with the boards of Sonali and BASIC banks.”
The capital-to-risk weighted assets ratio (CRAR) of five state-owned commercial banks (SoCBs) came down to 4.88 per cent in the Q2 from 6.31 per cent in the previous quarter.
The central bank earlier had fixed the CRAR at minimum 10 per cent in keeping with the country’s overall risk factors in the banking sector.
On the other hand, the shortfall of CRAR of three specialised banks rose to 18.07 per cent during the period under review came down to 16.99 per cent in the Q1. It was 17.35 per cent in the Q4 of 2014.
The SoBs are Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, BASIC Bank, Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKUB) and Bangladesh Development Bank Limited (BDBL).
Of them, only Agrani Bank and BDBL now stay in the positive territory, the BB data showed.
Besides, three private commercial banks (PCBs) out of 39 are facing capital shortfall due to higher volumes of their non performing loans, according to the central bankers.