State-owned banks want capital support in next budget
The banks say there will be no fund shortages while implementing the stimulus packages
Top executives of state-owned banks have proposed the government to infuse capital into the entities in the upcoming budget for the 2020-21 fiscal year.
A number of banks also expressed fear of huge losses due to the coronavirus pandemic during their meeting with the Financial Institutions Division (FID) Senior Secretary Md Ashadul Islam on Wednesday.
After listening to all their concerns, the finance ministry asked them to submit their written statements by next week.
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"Upon receiving the written statements, the proposal for fund injection can be made in the next budget to meet their capital shortage," an FID official told The Business Standard.
The official said that the finance minister had earlier announced banks would not get budget allocation anymore to meet their capital shortage. Therefore, there is no allocation in this regard.
"However, the situation is now different as the virus outbreak has jeopardised everything," the official added.
At the meeting, the managing directors and CEOs of the state-owned banks also said there will be no fund shortages in implementing the government announced stimulus packages to cushion the coronavirus fallout.
However, they fear that suspension of taking interest on loans for two months and relaxation on loan instalment payments till June may turn them into loss-making entities.
Obayed Ullah Al Masud, Rupali Bank managing director and CEO, said they discussed about implementing the stimulus packages at the meeting. The banks were also asked to what extent they had been affected by the fallouts of Covid-19.
"Rupali Bank alone will incur Tk500 crore in losses as taking interest on loans is suspended for two months and loan instalment payments are relaxed until June," he added.
Implementation of the government announced stimulus packages has already begun, said Shams-Ul Islam, managing director and CEO of Agrani Bank.
"We spoke about how the implementation can be completed smoothly and good borrowers can get bank loans in a transparent manner," he said, adding state-owned banks will not face any fund crisis in implementing the stimulus packages.
"Though the stimulus package will be implemented by both state-owned and private banks, public banks have a bigger responsibility here. At the meeting, the state-owned banks were instructed accordingly in this regard," said the Agrani Bank CEO.
Participants also emphasised use of fintech and blockchain technologies for banking in the post-pandemic period.
When contacted, FID Senior Secretary Md Ashadul Islam told The Business Standard that they discussed action plans to revive the virus-hit economy by implementing the stimulus packages.
"As the packages will be disbursed by the banks, we asked them if they have any problems. Besides, we decided that the FID will monitor the implementation alongside the central bank," added the senior secretary.
