Cash-strapped Karmasangsthan Bank is going to get Tk 200 crore in assistance from Bangladesh Bank for strengthening its small loan distribution capacity to empower country’s unemployed youths.
Officials of the state-owned specialised bank said that approval for state guarantee by the Finance Division against the BB loan on five per cent annual interest rate was in its final stage.
Karmasangsthan Bank has long been demanding for fresh fund from the government to expand its core business of providing loans to the unemployed youths after receiving state-sponsored trainings, they said.
According to Finance Division officials, the guarantee would remain active for three years.
Karmasangsthan Bank managing director Abul Hossain said the bank badly needed fresh fund to expand its capacity of loan distribution against the backdrop of prevailing high unemployment rate among youths.
The expansion of loan distributing capacity would help the bank make higher profit, he said.
Operating since 1998 Karmasangsthan Bank made a profit of Tk 0.18 crore in the 2016-2017 fiscal year and Tk 1.71 crore in last fiscal year.
As a specialised bank it is not allowed to take savings from general people, one of the major reasons for its fund crisis and the slow growth of profit, according to the bank’s officials.
Earlier, the Finance Division provided state-guarantee against loan of Tk 215 crore taken from BB by Karmasangsthan Bank in three phases — Tk 100 crore in May 2015, Tk 15 crore in December 2015 and Tk 100 crore in October 2017.
Available data shows that the paid up capital of the bank stood at Tk 499.50 crore until 2017-18.
Till June 30 2017, the bank distributed accumulated loans of Tk 3,799.72 crore and recovered loans amounting to Tk 3,441.38 crore with a recovery rate of 94 per cent.
The bank has managed to keep the classified loans, alongside recoverable loans, at a tolerable level.
The rate of classified loans is 7 per cent and there is no shortfall in provision against the classified loans.
As many as 4,66,807 loan recipients were so far directly benefitted from the loan, the minimum amount of which is Tk 1 lakh and the maximum Tk 20 lakh, distributed from the bank’s 33 regional offices and 242 branches across the country.