Sonali Bank seeks guarantee from govt against Tk 60b

Desk Report: Sonali Bank has sought guarantee worth Tk 60 billion from the government to urgently meet its huge capital shortage, officials said, reports the financial express.
It also wants commission on a Tk 942 billion letter of credit (LC) opened for importing equipment and services for Rooppur Nuclear Power Plant (RNPP).
The available data showed that Sonali Bank Ltd (SBL) had a capital shortage of Tk 67.55 billion until March 2018. It was Tk 53.97 billion at the end of December 2017.
On August 30, SBL Managing Director Obayed Ullah Al Masud wrote to finance ministry with a plea of help.
The SBL sought the issuance of government’s guarantee worth Tk 60 billion in its favour to address its capital shortfall.
“It needs the injection of fresh funds immediately,” a source in the largest state-owned bank told the FE.
When contacted, a high official of the financial institutions and banking division said, “We’ve received the proposal of funds sent by the SBL.”
SBL officials said it needs to strengthen its capital base and maintain minimum capital requirement in line with the Basel-III banking guideline.
“We’ve sought guarantee from the government most recently,” a senior official of the bank told the FE.
He explained that the government assures its guarantee and the central bank then raises the capital status as per the Basel guideline.
The official said a total of Tk 50 billion in commission comes usually through charging 0.40 per cent against the LC opening for the RNPP project.
If the government provides the actual commission instead of block allocation as per rules, he said, the bank could get some Tk 50 billion from the project.
In this case, he said, the government may not need to provide money for bank’s recapitalisation.
The government has decided to provide Tk 200 million of block allocation as commission for the bank, he added.
Currently, the bank provides 37 services free of cost to the beneficiaries under the government’s safety-net programme while 14 services at nominal costs.
Besides, different types of pension schemes are being operated by the bank.
It also lends to different problem-ridden state entities like Bangladesh Jute Mills Corporation (BJMC), Bangladesh Agricultural Development Corporation (BADC) and Bangladesh Petroleum Corporation (BPC).