Dhaka, Bangladesh (BBN)– The government has provided the scam-hit BASIC Bank Limited with BDT 12 billion more for meeting its capital shortfall, officials said.
“The fund will not be used for any other purpose except its recapitalisation,” a senior official of the Ministry of Finance told BBN in Dhaka on Sunday.
He also said the ministry has already disabused the fund to the public bank.
The government’s latest measure came against the backdrop of rising trend in capital shortfall of the scam-hit state-owned commercial bank (SoCB) recently.
The bank’s capital shortfall rose to BDT 29.91 billion as on September 30, in line with the Basel-III standard, from BDT 29.16 billion three months ago, according to the central bank’s latest statistics.
Bangladesh started implementing Basel-III for calculation of capital-to-risk weighted assets ratio (CRAR) of all banks from the January-March period of 2015 for ensuring stability in the banking sector.
Both the MoF and the Bangladesh Bank (BB) will expedite their monitoring for ensuring proper use of the fund, an official familiar with the developments of SoCB said.
BASIC Bank had received BDT 11.90 billion in the last financial year (FY), 2014-15, on the same ground.
The government earmarked BDT 50 billion for recapitalisation of banks and others in the current FY, 2015-16.
Talking to BBN, a senior official of the Bangladesh Bank (BB) said the capital base of BASIC Bank deteriorated substantially, as its provisioning shortfall increased following a sharp fall in quality of assets.
The bank’s provisioning shortfall rose to BDT 17.23 billion in the third quarter (Q3) of 2015 from BDT 16.91 billion in the preceding quarter, while the amount of classified loans reached BDT 41.46 billion from BDT 43.07 billion, the BB data showed.
The trouble-torn bank had desperately sought the money from the public exchequer to recoup its capital shortfall, they added.
They also said the SoCB faced image crisis in the global arena after financial irregularities, involving around BDT 45 billion, were detected in giving loans by its three branches – Gulshan, Dilkusha and Shantinagar – in Dhaka by the central bank between 2009 and 2013.