No more capital injection for state-owned banks
Finance Minister AHM Mustafa Kamal has proposed the government to stop capital injection for state-owned banks.
While presenting the budget proposal for FY2022-23, the minister said the practice of capital injection in state-owned banks with people's tax money has been quite prevalent in the country.
"State-owned banks have the highest capital deficit in the country's banking sector. Due to various irregularities in debt management, the institutions underwent capital crisis to keep more defaulters and provisions," said the minister.
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"We are encouraging state-owned banks to redesign their business models and conduct banking activities. As a result, state-owned banks are becoming increasingly self-reliant," he added.
"According to a Bangladesh Bank report, the capital deficit of most state-owned banks has declined because they are saving capital without paying dividends as they do not get the benefit of capital injection from the government," he said.
The Bangladesh Bank's data shows the capital shortfall of five state-owned banks at the end of December 2021 was Tk17,339 crore, which declined to Tk8,134 crore three months later.
"Even though public sector banks did not make any profit during the Covid-19 period, they did not have to pay finances," he added.
In the proposed budget, he said about Tk 8,509 crore corporate tax has been collected from the banking sector in the last fiscal year 2020-2021.
"The legal reform initiatives I have mentioned in the financial sector, if fully implemented, will strengthen the foundation of the banking sector," he hoped.
Finance Minister AHM Mustafa Kamal has placed the Tk6,78,064 crore national budget for FY23 at Jatiya Sangsad according top priority to safeguarding marginal people from inflation fuelled by the Russia-Ukraine conflict.
This is the fourth budget of the third consecutive term of the government led by Prime Minister Sheikh Hasina and also the overall 51st budget of the country.
The proposed budget is Tk74,383 crore higher than the original budget size of the FY2021-22 fiscal year, which was Tk6,03,681 crore.
