Published in New Age on Tuesday, 26 April 2016
Scam-hit state-owned banks: Tk 2,500cr bail-out fund likely in new budget
The finance ministry is likely to set aside Tk 2,500 crore in the new budget to recapitalise the scam-hit state-owned commercials banks.
Officials said a reluctant finance division was forced to keep the possible allocation in the face of ‘political pressure’.
The ministry of finance has been facing severe criticism for providing bail-out funds to the scam-hit banks like Sonali and BASIC during the last three years from the state coffer.
The banks and financial institutions division officials said the proposed fund was much lower than the expectation to meet the capital shortage of the state-owned commercial and specialised banks.
Finance division additional secretary Gokul Chand Das said there were demands for more than Tk 14,000 crore recapitalisation fund from the state-owned banks.
He said the banks and financial institutions were facing huge capital shortfall.
BASIC Bank, which became bankrupt due to massive shoddy loans provided by the previous board of directors led by former chairman Abdul Hye Bacchu, faced capital shortfall to the tune of Tk 3,050 crore.
No action was taken against Bachhu though probes found that hefty loans were extended to fictitious borrowers under his initiative. Bacchu’s involvement was detected following internal as well as the central bank probes.
BASIC Bank’s capital shortfall is highest among the state-owned commercial banks although the government provided Tk 2,300 crore to BASIC in the last two fiscal years.
Sonali Bank which was given more than Tk 2,600 crore in two tranches during the two years still demanded Tk 2,934 crore to meet its capital shortfall.
It failed to realise a single penny during the past three years of the Tk 3,500 crore swindled by little-known Hallmark Group in 2012.
The capital shortfalls of Janata Bank and Rupali Banks are worth Tk 663.24 crore and are Tk 145.50 crore respectively.
Bangladesh Krishi Bank has the highest capital shortfall of Tk 6,676 crore among specialised banks followed by Rajshahi Krishi Unnayan Bank’s Tk 582.94 crore.
The finance division had kept Tk 5,000 crore in the outgoing budget for investment in state-owned banks and financial institutions.
But it had to slash Tk 3,000 crore in the revised budget of the current fiscal year because of revenue shortfall that has been estimated at over Tk 30,000 crore.
Centre for Policy Dialogue executive director Mustafizur Rahman criticized the government policy of recapitalising the state banks despite their financial malpractices.
It was disappointing that the government provided bail-out funds to the scam-hit banks from the ‘taxpayers’ money, he said.
He said it was contrary to good governance and was not a good sign for the economy.