The state-owned Rupali Bank has sought around Tk 1337 crore from the government to meet its soaring capital deficit after Bangladesh Bank last month asked the ailing bank to become compliant latest by September, official sources said.
Rupali Bank in a letter written to finance ministry last week sought the amount from the government. The shortfall found in the bank’s capital was based on December 31, 2013.
The bank officials at Rupali said they had kept Tk 740.60 crore as provision against its classified loans of Tk 1,799.25 crore as of December, last year. The remaining Tk 599.79 crore has to be sourced from the finance ministry as the bank has no means to arrange the entire required provision amount against its huge bad loans, reports the New Age.
‘We are undone as huge capital shortfall has to be met by September this year as asked by BB,’ M. Farid Uddin, managing director of the bank told New Age on Sunday.
He said the bank could not cope with the huge losses it had to incur between 2001 and 2007 as activities of the bank had been stagnant during the long period, thanks to the government’s decision to sell out the bank to strategic investors.
Meanwhile, bank inspection department of BB in late April asked Rupali Bank to meet its capital shortfall by September this year, or face stern regulatory action.
The finance ministry officials, however, said the financial health of all public sector banks is almost identical as they often seek fresh fund from the government due mainly to their governance failure and pervasive corruption.
The finance ministry provided Tk 4,100 crore to four state-owned commercial banks to meet their capital shortfall. Of the total, Rupali was given Tk 210 crore.
The finance official said no decision on providing fresh fund to state-owned banks would be taken before the first quarter of the new fiscal year ends in September.
The finance ministry is planning to overhaul the governance structure of all public banks through signing memorandum of understandings with the boards of directors of the tainted banks, in a bid to make a turn around in the poor financial profiles of the banks.