Capital deficit at state banks worries IMF


State banks have failed to maintain the required capital amid increasing default loans and net losses due to various irregularities and scams, worrying a visiting IMF mission.
The combined capital deficit at four state banks reached Tk 1,981 crore on December 31 last year from a Tk 1,172 crore surplus on June 30.
The team of the International Monetary Fund has also expressed concern about the deterioration in the banks’ major financial indicators.
On March 20 this year, the IMF mission started a second review of its extended credit facility loans. The mission has held several meetings with the finance minister, and high officials of the finance ministry and Bangladesh Bank.
A finance ministry official said the IMF mission is worried about governance in the state banks and they have discussed several possible measures the government and the central bank can take to address the problems.
Sonali Bank had a capital deficit of Tk 764 crore, Janata Tk 850 crore, and Agrani Tk 448 crore in December 2012, according to BB.  Rupali Bank had a surplus of Tk 80 crore.
But in June last year, the situation was re-verse and all the banks had surplus capital.
A BB official said an increase in the banks’ default loan provisions led to a fall in the profits of two banks — Rupali and Agrani, while the two other banks — Janata and Sonali — counted losses.
A Sonali Bank official said big scams were unearthed in some branches of the bank last year, which resulted in a fall in its financial indicators.
Last year, the default loans of these four banks increased by 135 percent and stood at Tk 21,614 crore. In the same period, the banks’ provision shortfall was Tk 3,732 crore.
The BB conducted an inspection into these banks to see whether the classified loans and profit in their statements were proper.
The inspection found the financial indicators of these banks deteriorated further, the central bank official said.
The parliamentary standing committee on the finance ministry held a special meeting on Sonali Bank on March 13.
In the meeting, the BB presented a picture of the condition of Sonali Bank, which showed the situation worsened compared to the provisional data.
A member of the committee said the BB had detected bad loans worth Tk 2,313 crore while inspecting 12 branches of Sonali Bank.
This reveals its provision shortfall to be Tk 4,278 crore on December 31, 2012, while it was shown as Tk 2,382 crore in the Sonali Bank statement.
The BB also told the committee that as new bad loans were found, the capital deficit of Sonali Bank would stand at Tk 1,904 crore, which was shown as Tk 764 crore in the BB provisional data.
As per the BB provisional estimate, Sonali’s net loss was Tk 1,278 crore in 2012. A BB official told the standing committee that it could increase to Tk 2,418 crore.

Source: The Daily Star