Eleven banks faced a capital shortfall of Tk 27,918 crore in September, which exposed their fragile health.
The banks are Bangladesh Krishi, Sonali, Agrani, BASIC, Janata, Rupali, Rajshahi Krishi Unnayan, ICB Islamic, Bangladesh Commerce, Padma, and AB Bank.
Corruptions perpetrated at the banks are mainly responsible for the large capital shortfall.
Up until September, Bangladesh Krishi Bank had the highest amount of shortfall of Tk 12,144 crore, up 12 percent from nine months ago, data from the Bangladesh Bank showed.
Sonali’s capital shortfall, however, decreased to Tk 2,633 crore from Tk 3,063 crore during the period.
The central bank should take immediate measures to address the problem as such a situation sends a negative signal to the global community that the banking sector is weakening, said an official of the central bank.
Foreign businesses chiefly look at the capital base and the non-performing loans of banks before making any investment decisions. So, this level of the capital shortfall will put foreign investors at bay, the central banker said.
Although the banking sector posted a surplus capital in the third quarter, the amount narrowed significantly because of the increase in the defaulted loans.
The sector had a surplus capital of Tk 12,418 crore in September, down 22 percent from December last year. NPLs totaled Tk 101,150 crore, up 14 percent from the same period a year ago.
The capital shortfall at Janata Bank fell to Tk 1,416 crore compared to Tk 5,475 crore. A wide range of scams was responsible for the shortage at the state bank.
Md Abdus Salam, managing director of Janata Bank, said that the shortfall would go down next year as the operating profit of the lender was on the rise.
Agrani Bank’s capital shortfall declined to Tk 2,463 crore in September in contrast to Tk 3,002 crore in December.
Mohammad Shams-Ul Islam, managing director of Agrani Bank, said that the state lenders should collectively take a concerted effort to reduce the shortfall.
“We will give a proposal to the government soon to reduce the shortfall,” he said adding that the lender now provides 42 types of government services to people without taking any fees.
The government can issue a bond in favor of Agrani Bank so that it can adjust the securities with its capital, Islam said.
“This will help us improve the capital position. Besides, we will pay back the equal amount of the bond to the government upon the maturity of the instrument.”
The capital shortfall at Padma Bank stood at Tk 540 crore in September, an increase of 75 percent from nine months ago.
Md Ehsan Khasru, managing director of the private commercial bank, said that the previous management and the board had been involved in huge irregularities while giving out loans.
“The current management is trying to improve the financial health, and it usually takes at least five to six years to turn a fragile bank into a good one.”
“We are now giving efforts to attract foreign direct investment in order to strengthen the capital base.”
The capital shortfall at AB Bank stood at Tk 355 crore in September, against a surplus of Tk 278 crore in December.