The private banks of Bangladesh have increased their capitals by 7.75% in the first half of the ongoing year. It has happened in spite of an increase in their default loans due to political instability and very low investment. Statistics of Bangladesh Bank shows that there has been an increase of Tk 3,065 crore From December 31, 2012 to June 30, 2013.
Out of the 36 private banks, capital of 33 has gone up. On the other hand, within the first half of the year, the amount of default loan has increased massively. The default loan of banks has increased by Tk 6000 crore within the mentioned period. The Managing Director of Pubali Bank recently stated that the overall capital was increased as there was no provision shortfall against bad loans. He added that from 2016, the banks must maintain higher capital to meet the Basel-III requirements. Most banks have already started increasing their capital to make sure that they can handle the pressure from 2016.
Industry experts are blaming the increase of default loans on the political instability, constant strikes across the country, new loan provisioning rules provided by the Bangladesh Bank and low investment due to the upcoming national election.
It is being assumed that the private banks are holding a much stronger financial base than the state-run banks. Many believe that it is because of the strict monitoring by the central bank. The state-banks are failing to increase their capital; within the first six months of 2013, the capital shortfall of the public banks was Tk 9,062 crore.
The three private banks failing to keep up with the rest of the group are ICS Islamic Bank (capital shortfall Tk 1,302 crore), Bangladesh Commerce Bank (capital shortfall Tk 250 crore) and Premier Bank (capital shortfall Tk 183 crore).
Most big Bangladeshi companies have stake in financial institutions including banks. Progress of the reputed companies therefore demands a lot on the development of private banks.
Out of the 36 private banks, capital of 33 has gone up. On the other hand, within the first half of the year, the amount of default loan has increased massively. The default loan of banks has increased by Tk 6000 crore within the mentioned period. The Managing Director of Pubali Bank recently stated that the overall capital was increased as there was no provision shortfall against bad loans. He added that from 2016, the banks must maintain higher capital to meet the Basel-III requirements. Most banks have already started increasing their capital to make sure that they can handle the pressure from 2016.
Industry experts are blaming the increase of default loans on the political instability, constant strikes across the country, new loan provisioning rules provided by the Bangladesh Bank and low investment due to the upcoming national election.
It is being assumed that the private banks are holding a much stronger financial base than the state-run banks. Many believe that it is because of the strict monitoring by the central bank. The state-banks are failing to increase their capital; within the first six months of 2013, the capital shortfall of the public banks was Tk 9,062 crore.
The three private banks failing to keep up with the rest of the group are ICS Islamic Bank (capital shortfall Tk 1,302 crore), Bangladesh Commerce Bank (capital shortfall Tk 250 crore) and Premier Bank (capital shortfall Tk 183 crore).
Most big Bangladeshi companies have stake in financial institutions including banks. Progress of the reputed companies therefore demands a lot on the development of private banks.