Dhaka, Bangladesh (BBN)– The capital shortfall of all eight state-owned banks (SoBs) increased by 29.63 per cent in the first quarter (Q1) of 2015 mainly due to further deterioration in the quality of their assets and implementation of Basel-III requirements.
The capital shortfall rose to BDT 105.89 billion in the Q1 of 2015 from BDT 81.69 billion three months ago, according to the central bank’s latest statistics.
The central bankers said the quality of assets of the public sector banks has been deteriorating continuously for lack of due diligence and internal control and compliance (ICC).
ICC includes monitoring, supervision, recovery, maintaining ethical standards and prevention of fraud and forgery.
“We’ll sit with the top management of four state-owned banks (SoCBs) next week to review their overall performances including capital base erosion,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
The central bank is scheduled to sit with the chief executive officers and chairmen of four SoCBs on July 12 to review memorandum of understanding (MoUs) of the SoCBs.
The BB earlier signed the MoUs with the managements of the SoCBs to improve their financial performance by providing policy support.
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 Janata Bank and BDBL now stay in the positive territory, the BB data showed.
Besides, there was erosion in the capital base of all banks, including SoBs, during the period under review following exclusion of a few components from the capital in line with the Basel-III requirements.
Bangladesh started implementing Basel-III for calculation of capital-to-risk weighted assets ratio (CRAR) from the Q1 of this calendar year, aiming to consolidate the stability in the banking sector.
The CRAR of four SoCBs stood at 6.31 per cent in the Q1. The capital adequacy ratio (CAR) was 8.26 per cent three months before under the Basel-II calculations.
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.
Under the Basel-II provision, the standard requirement of CAR is minimum 8.00 per cent.
On the other hand, the shortfall of CRAR of three specialised banks came down to 16.99 per cent during the period under review from 17.35 per cent in the Q4 of 2014.