No more recapitalisation fund for SoBs: Mustafa

Staff Correspondent  | Published: 00:00, Aug 26,2019


Finance minister AHM Mustafa Kamal on Sunday said that there would be no more recapitalisation of four state-owned commercial banks with public money.

The banks — Sonali, Janata, Agrani and Ruapali banks —would have to maintain their operational cost by their own, he said, emerging from a meeting with the top officials of the banks at the Planning Commission in capital Dhaka.

He admitted that there was allocation for the bank in the current fiscal year.

But there would be no more allocation for the banks in the next budget, he said, adding that the banks would have to survive with their own earnings.

The government provided Tk 10,666 crore as bailout fund to the state-owned banks in three years since 2014-15 to meet their severe capital shortfalls stemmed from loan scams.

BASIC received the highest amount of bailout fund —Tk 3,390 crore — as it was on the verge of bankruptcy due to its huge defaulted loans.

The bank’s crisis arose after its previous board of directors under the chairmanship of controversial Sheikh Abdul Hye Bacchu extended fictitious loans worth around Tk 6,000 crore.

Two other scam-hit banks, Sonali and Janata, received Tk 3,003 crore and Tk 814 crore respectively although Sonali Bank could not recover a single penny of the Tk 3,500 crore embezzled by little-known Hallmark Group in 2013.

Mustafa Kamal directed the banks to submit their respective work plans by next seven days.

He also directed to arrange a review meeting on the work plans on September 8.

He said Sonali, Janata, Agrani and Ruapali banks held 25 per cent of the overall savings of the banking sector and a significant contribution to the economy by them was very much expected.

Replying to a question whether the amount of defaulted loans decreased, Mustafa Kamal said the amount of such loans had not increased.

Referring to the loan rescheduling facility, he said that the amount of bad loans looked high as the exit plan was yet to be implemented.

He hoped that the amount of bad loans would reduce substantially once the exit plan was executed.

The amount of defaulted loans in the April-June quarter did not increase, he said.

Only interest against the defaulted loans increased, he said, adding that the amount of bad loans in the state-owned banks in fact reduced.

He said that many loan defaulters could not take the loan rescheduling facility by paying two per cent down payment as a writ was filed against a circular of the Bangladesh Bank in this connection.

He said many defaulters would be able to take the facility once the writ was settled in court.

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