The government will next week provide around Tk 2,000 crore to Sonali and Agrani banks to help meet their capital shortfalls on condition that the state-run banks will go through credit risk-related reforms.
The central bank last week sent the ‘business plans’ of the banks to the Banking Division, credit risk management policy being a major component of the plan, a finance ministry official said.
In the first phase, the government will give four state banks Tk 4,100 crore against their capital shortfall of Tk 8,863 crore.
In line with Bangladesh Bank’s recommendations, Sonali will receive around Tk 1,200 crore and Agrani Tk 800 crore, but Janata and Rupali will get funds next year, the official said.
Sonali and Agrani drew a sector-wise credit growth plan in their credit risk management policy, according to the business plans of the banks.
Sonali Bank showed that its highest credit growth would not exceed 8 percent in the trading sector and 2 percent in the industrial sector.
In line with the International Monetary Fund’s conditions tagged with loans under its Extended Credit Facility (ECF), the government has taken initiatives to meet the capital shortfall of the banks in two phases.
As the banks are facing a huge capital shortfall due to various scams last year, the IMF set a condition that public money will be injected into the banks only if they go through drastic reforms.
The government also apprised the IMF of the reforms, the official said.
Before the IMF approved the fourth instalment of an ECF credit on November 27, the government made a detailed commitment about the reforms.
The government will gradually restore the capital positions of the banks in line with the regulatory capital adequacy standards, conditional on progress on actions agreed under the revised memorandum of understanding, which was signed in September.
The banks have already drafted, among others, a stronger credit risk management policy. Within December, the boards of the banks will formulate an internal control and compliance policy to improve their corporate governance, the government told the IMF.
According to the business plans, the boards of the banks will have to chalk out an independent internal audit programme.
The government also told the IMF that it will impose sanctions on the banks in case of noncompliance with the MoU.
The government has committed to the lender that it will prepare a detailed action plan by March 2014 to bring all branches of the banks under automation.