The government has disbursed Tk 151.12 crore to the Bangladesh Krishi Bank (BKB) and Grameen Bank (GB) to meet the interest subsidy and for maintaining the government’s 25 percent stake respectively.
The Finance Division issued a circular on Sunday, signed by its Deputy Secretary Mohammad Anisuzzaman Khan, regarding the disbursement of the fund to the specialised state-owned banks for the outgoing Fiscal Year 2018-19, which ended the same day.
The BKB provides loans to the agriculture sector at a maximum of 9 percent interest rate. However the bank’s cost of funds (COF) is higher, which is provided by the government. The bank has received Tk 150 crore as interest subsidy, after demanding a fund of Tk 230 crore, said division sources.
In laymen terms, COF is the interest that a financial institution must pay to investors for the use of their money to make loans to borrowers.
On the other hand, The Finance Division has injected only Tk 1.12 crore to Grameen Bank, for maintaining the 25 percent government stake, as per the GB Ordinance, 1983.
An official of the Finance Division, on condition of anonymity, said: “The government has disbursed a small amount of funds to 2 state-owned specialised banks to cover their cash shortage.
“The demand for capital of state-run banks Sonali, Janata, Agrani and Rupali was not fulfilled due to the poor revenue collection performance of the National Board Revenue (NBR).”
The official added that Sonali, Janata, Agrani, Rupali, Basic, Bangladesh Development Bank (BDBL), BKB and Rajshahi Krishi Unnayan Bank (RKUB) are suffering from a huge capital shortfall of around Tk 18,000 crore, caused by persistent financial irregularities and irresponsible lending practices.
According to the latest data, provision shortfall in the BKB has increased by Tk 437 crore (from Tk 8,447 crore to Tk 8,884 crore) from January to March this year.
A letter, recently issued to top executives of six state-owned banks by the Finance Institutions Division, revealed that till March the default loan of Janata Bank was Tk 4185.62 crore , Agrani bank Tk 396.57 crore , Rupali bank Tk 239.57 crore , Sonali Bank Tk 176.20 crore , Basic Bank Tk 172.29 crore and Bangladesh Development Bank Tk 13.35 crore.
The government had allocated Tk 1,500 crore for the outgoing fiscal year for recapitalizing of state-owned banks. The same amount was allocated for recapitalisation in the FY 2019-20.