Central Bank Finds Capital Recovery Plans of Four State Banks Unrealistic

Bangladesh Bank has rejected the capital recovery action plans of four state-owned commercial banks — Agrani, Janata, BASIC, and Rupali — labelling their proposals to tackle a substantial capital shortfall as “unrealistic.” According to the central bank, the combined capital deficit of these four banks stood at approximately Tk31,000 crore as of December 2024. The banks were instructed to submit a five-year plan to rectify the shortfall by 2029.

The other two banks — Sonali and Bangladesh Development Bank Ltd (BDBL) — faced a provisioning shortfall of Tk4,763 crore. Due to provision forbearance, however, they reported a capital surplus of Tk167 crore.

Agrani Bank’s plan proposes to reduce its capital deficit by Tk6,245 crore over five years despite posting a net loss of Tk937 crore in 2024. Between 2022 and 2024, the bank recorded net profits in only two years, totalling just Tk180 crore. Bank officials note that addressing a capital shortfall requires either profit growth, government recapitalisation, or a reduction in non-performing loans, none of which are currently favourable for Agrani.

Bangladesh Bank has returned Agrani’s plan, asking for a revised version aligned with financial realities. BASIC Bank, with a deficit of Tk8,621 crore, aims to reduce it to Tk3,257 crore by 2029. Janata Bank, despite a net loss of Tk3,071 crore in 2024, projects a capital shortfall of Tk20,600 crore by 2029. Rupali Bank has submitted a relatively realistic plan.

Sonali Bank reported a surplus of Tk64 crore at the end of 2024 and plans to raise it to Tk5,842 crore by 2029, while BDBL expects to increase its surplus as well. Economists stress that profit growth alone will not solve structural weaknesses; balance-sheet restructuring, risk management, and aggressive recovery of non-performing loans are essential.

According to Bangladesh Bank, 24 out of 61 banks have failed to meet the minimum capital requirement. By June 2025, the banking sector’s combined capital shortfall rose above Tk155,000 crore.

KhaborwalaAJ