A collective capital shortfall of Tk37,506 crore in the third quarter (July-September) of 2023 set a record in the banking sector due mainly to lack of good governance and growing non-performing loans (NPLs).
September's figure was the highest shortfall, while the previous high of Tk34,640 crore was registered in the last quarter of 2021 for 15 banks.
Bangladesh Bank data showed that in the second quarter (April-June) of this calendar year, the capital shortfall for 15 banks reached Tk33,732 crore.
After three months, that figure has risen to Tk37,506 crore for 14 banks.
As per Basel III, which is the international regulatory framework for banks, the minimum capital adequacy ratio (CAR) is 10.5% with an added 2.5% conservation buffer.
The 14 banks failed to maintain the minimum CAR.
In September, the banking sector's CAR was 11.08%.
Banks say that the total decline in NPLs may not be representative of the complete picture across individual banks, since NPLs did not actually decrease in the September quarter.
It was rather due to the rescheduling of large loans by a state-owned bank.
However, the overall NPLs in the banking sector decreased by Tk642 crore by the end of September. Nevertheless, the overall capital shortfall saw a drastic increase.
Data shows that in July-September, four new names were added to the chart with a deficit.
The four banks are Bengal Commercial Bank (Tk70.70 Crore), Citizens Bank (Tk95.37 crore) and the local operations of Pakistan's Habib Bank (Tk33.40 crore) and National Bank of Pakistan (Tk43.65 crore.)
Six out of nine state-owned and specialized banks; Janata (Tk3,029 crore), Agrani (Tk4,828 crore), Rupali (Tk2,121 crore), Basic (Tk3,150 crore), Bangladesh Krishi (Tk15,803 crore), and Rajshahi Krishi Unnayan Bank (Tk2,472 crore) faced a total Tk31,406 crore shortfall at the end of September.
Their shortfall was Tk28,473 crore in the previous second quarter.
Seeking anonymity, a state-owned bank official told Dhaka Tribune: “State-owned banks often provide various government services at relatively low interest rates. While this fulfills an important public function, it also means state-owned banks lose time with potential income for those.”
Besides, six private banks; Bangladesh Commerce Bank (Tk1,402 crore), ICB Islamic Bank (Tk1,823 crore), National Bank (Tk2,024 crore) and Padma Bank (Tk607 crore) with Bengal Commercial Bank and Citizen Bank faced a total capital shortfall of Tk6,023 crore at the end of September.
Their shortfall was Tk5,185 crore at the end of June.
However, two foreign banks, Habib Bank and National Bank of Pakistan, faced a total capital shortfall of Tk77 crore.