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The three listed banks are National Bank, ICB Islamic Bank, and the state-owned Rupali Bank. Due to a lack of good governance, growing irregularities are creating a crisis of confidence in the financial sector, according to concerned individuals.
The country's banking sector is currently grappling with various financial irregularities. Several banks are experiencing a capital shortfall due to the increasing number of defaulted loans. In the third quarter of this year, three banks listed on the capital market suffered a total capital shortfall of Tk 5,968 crore.
The three listed banks are National Bank, ICB Islamic Bank, and the state-owned Rupali Bank. Due to a lack of good governance, growing irregularities are creating a crisis of confidence in the financial sector, according to concerned individuals.
According to Bangladesh Bank data, the capital deficit of state-owned Rupali Bank stood at Tk 2,121 crore at the end of the September quarter. Additionally, the private sector ICB Islamic Bank's capital deficit is Tk 1,823 crore, and National Bank's deficit is Tk 2,024 crore.
In this regard, capital market expert Professor Abu Ahmed told The Daily Messenger, “Investors in the capital market are now very cautious. If a bank is in bad shape, they are aware of that. Some banks are on the brink of bankruptcy, suffering from capital shortages and other problems for a long time.”
According to Dhaka Stock Exchange data, the troubled National Bank has almost lost foreign investment, with only 0.89 percent of the bank's shares held by foreigners. Furthermore, at the end of September, the bank's defaulted loans stood at Tk 13,514 crore, with about 32 percent of the disbursed loans turning into defaults.
The overall condition of ICB Islamic Bank, facing a crisis due to irregularities and loan scams, has worsened. Loans disbursed due to mismanagement are not being repaid, and the bank is drowning in default. At the end of the September quarter, 87 percent of the bank's disbursed loans had defaulted, with the default loan amounting to Tk 588 crore. Additionally, the bank has absolutely zero foreign investment.
On the other hand, at the end of September, the defaulted loans of the state-owned Rupali Bank stood at Tk 8,728 crore. More than 20 percent of the bank's total disbursed loans have defaulted, with no foreign investment in this listed bank.
In this regard, Dr. Zahid Hussain, the former chief economist of the World Bank’s Dhaka office, told The Daily Messenger, “The capital shortage problem of banks should be resolved very quickly. If the board of directors of the banks cannot solve this problem, the banks need to be merged. If this is not possible, these banks should be closed.”
Messenger/Disha
