Scam-hit state-owned banks seek Tk 20,398cr in bailout

Growing bad loans behind capital shortfall: experts

Shakhawat Hossain | Published: 00:16, Feb 15,2018 | Updated: 01:49, Feb 15,2018

 
 

Seven state-owned commercial and specialised banks at a meeting on Wednesday demanded Tk 20,398 crore in bailouts because of capital shortfall caused, according to experts, by the banks’ failure to recover the loans given on political consideration.
Officials attending the meeting said that scam-hit Sonali Bank, Janata Bank and BASIC Bank sought Tk 11,000 crore or 55 per cent of the overall demand.
They noted that the demanded fund was much higher than the allocation of Tk 2,000 crore kept in the budget to recapitalise the state-owned financial entities.
According to officials, Sonali, which could not recover a single penny from its loan scam of Tk 3,500 crore given to little known Hallmark Group in 2013, demanded Tk 6,000 crore.
Janata Bank demanded Tk 2,500 crore after its capital shortfall of Tk 1,273 crore till September 2017 increased following detection of loan scam of Tk 5,500 crore to AnonTex Group in January 2018, said the officials.
The officials said that once profitable BASIC Bank was facing capital shortfall of Tk 2,500 crore because of extension of shady loan of over Tk 6,000 crore during the tenure of the bank’s previous board led by chairman Sheikh Abdul Hye Bacchu, reportedly appointed on political consideration.
According to the officials, capital shortfalls stood Tk 1,250 crore for Rupali Bank and Tk 21 lakh for Grameen Bank.
Specialised banks Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank are facing capital shortfall of Tk 7,540 crore and Tk 800 crore respectively, they said.
Presided over by financial institutions division secretary Eunusur Rahman, the meeting was attended by high officials of the Bangladesh Bank and the state-owned commercial and the specialised banks at the finance ministry.
Eunusur said that meetings would be held further to review the demands.
It will take time to settle the demands, he said.
Officials, however, said that the banks were asked to submit documents on the utilisation of the recapitalisation fund given in the previous fiscals, steps taken for recovering bad loans and updates on automation.
They noted that the government gave Tk 14,655 crore from the budgetary allocations between 2010-2011 and 2016-17 to bail out state-owned banks.
Of the amount, Tk 11,487 crore or 78 per cent of the subsidy, which the government calls recapitalisation fund, was given in the past four financial years between 2013-14 and 2016-17.
The major portion of the bailout fund (Tk 6,395 crore) was given to scam-hit state-owned Sonali Bank and BASIC Bank despite protests from the experts who argued that the public money was putting into ‘black holes’ in the name of bailout.
Experts continued demanding an end to recapitalisation of the state-run financial entities especially the scam-hit banks.
Former Bangladesh Bank governor Salehuddin Ahmed said that the scam-hit state-run banks should recover the bad loan that, according to him, was the main reason for the capital shortfall.
The central bank data showed that the defaulted loans in the six state-owned banks — Sonali, Janata, Agrani, Rupali, BASIC and Bangladesh Development Bank — increased to Tk 38,517.32 crore as of September 30, 2017 from Tk 34,580 crore as of June 30, 2017.
Approving loan on political consideration and corruption in the process should be considered as major factors for the growing bad loans in the state-owned banks and the overall banking sector, said Centre for Policy Dialogue research director Khondaker Golam Moazzem.

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