Due to a large capital deficit and the failure to recover specialized agricultural loans, the government is moving towards introducing major structural reforms in the specialized banking sector.
As part of this initiative, the merger of Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB) has already begun. The Financial Institutions Division of the Ministry of Finance has decided to prepare a concept paper on the matter.
The decision was taken at a special meeting held recently in the Financial Institutions Division. Special Assistant to the Chief Advisor Dr. Anisuzzaman Chowdhury attended the meeting.
The meeting reviewed deposit collection, loan disbursement; status of default loans; capital situation and cash recovery of those banks as well as Basic Bank and Bangladesh House Building Finance Corporation (BHBFC). The meeting paper shows.
At the meeting Nazma Mobarek, Secretary of the Financial Institutions Division, said the meeting reviewed implementation of the decisions taken to reduce default loans of state-owned specialized banks and financial institutions in the light of decision of the previous meeting on October 9.
Bangladesh Bank sources said the overall financial situation of state-owned specialized banks and financial institutions is not good. The default loans of Bangladesh Krishi Bank stood at Tk 17,370 crore at the end of last September, which is 48.9 percent of the bank's disbursed loans.
By the end of December 2024, the bank's capital deficit was Tk 18,189 crore. The condition of Rajshahi Krishi Unnayan Bank is not also in shape. About 20 percent of its disbursed loans are in default. Its capital deficit stood Tk 2,470 crore.
The meeting, held the view that since Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, Basic Bank and Probashi Kalyan Bank are scheduled banks, they are able to collect deposits from the general public.
However, Bangladesh House Building Finance Corporation, Ansar-VDP Unnayan Bank, Karmasangsthan Bank and Palli Sanchay Bank cannot collect deposits. It can be seen that loan disbursement by all banks and financial institutions has increased in the last three fiscal years.
However, in case of Rajshahi Krishi Unnayan Bank, the amount of loan is higher than its deposits, which is risky, said Dr. Anisuzzaman Chowdhury emphasizing the need for safe loan disbursement by selecting right customers.
Bangladesh Krishi Bank and Basic Bank have the highest capital deficit and the Managing Director of Bangladesh Krishi Bank told the meeting that the bank had earlier rescheduled loans of about Tk 11,000 crore, which is now converted into classified loans. The capital deficit has further increased.
Representatives of Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank said if project loans or deposits are available from various government institutions at low interest rates, the capital situation will be somewhat comfortable.
For this, they seek the cooperation of the Financial Institutions Division. On the other hand, the capital situation of Karmasangsthan Bank, Probashi Kalyan Bank, Palli Sanchay Bank, Ansar-VDP Unnayan Bank and BHBFC is relatively good.
