• Friday, December 19, 2014

Freedom in the air

Banks' capital base crosses 10pc requirement

Star Business Report

The capital base of banks has swelled well above 10 percent of risk-weighted assets, a regulatory requirement, data from Bangladesh Bank shows.

Capital that banks should hold against their risk-weighted assets rose to Tk 63,694 crore or 10.68 percent at the end of June. The amount was Tk 26,713 crore in December 2009 when Bangladesh introduced Basel-II, an international standard that requires financial institutions to maintain enough cash reserves to cover risks.

“The rise in capital between December 2009 and June 2014 is 139 percent. Banks' ability to absorb losses against risks has strengthened,” BB said in a statement yesterday.

The BB said the quality of banks' assets has improved due to stricter rules in classifying bad loans. Loans will be defaulted if borrowers fail to pay back the money for consecutive three months instead of earlier six months.

Banks' profit before tax and provision surpassed Tk 10,000 crore in the six months through June, compared to Tk 18,000 crore in full-year profits of 2013, according to the statement.

Banks have adequate liquidity and there is no pressure for money in the overnight call money market, the central bank said.

Foreign exchange reserves crossed $22 billion, which is equivalent to seven months' import payments. Healthy reserves have prompted the central bank to raise the Export Development Fund to $1.5 billion from $1.2 billion.

Published: 12:00 am Friday, August 29, 2014

Leave your comments | Comment Policy
eDaily Star
BIT DEFENDER