The Rajshahi Krishi Unnayan Bank (RAKUB) has sought Tk 14.83 billion from the state coffers for recapitalisation to meet its capital shortage.
It incurred Tk 6.14 billion in net loss in fiscal year 2019-20.
The financial institutions division (FID) backed RAKUB's plea and recently forwarded a letter to the finance division requesting to arrange money from the budgetary allocation.
In the letter, FID officials said the bank focuses on social responsibility and the government's agriculture development programme instead of attaining profit.
The RAKUB provides loans for ensuring food security and strengthening rural economy, according to them.
It disburses loans to high risky agriculture sector and other costly sectors but in many cases, they said, it does not get back money in case of natural calamity.
Taking the bank's role in the agriculture sector into consideration, the replenishment of its required capital can get priority, the officials noted.
A senior FID official told the FE that there is a budgetary allocation of Tk 15 billion in fiscal year 2020-21 for this sector.
The finance division may release the funds in favour of the loss-making banking institution taking into consideration its core requirement.
Former central bank governor Dr Salehuddin Ahmed told the FE that the performance of state-owned banks is not improving despite injection of public money into them.
He, however, said the role of the RAKUB and the Bangladesh Krishi Bank is crucial for rural economy and agriculture development.
According to Dr Ahmed, the banks have huge bad loans, especially given to cold storage owners, which could not be recovered.
"Since agriculture is very important for us now, krishi banks can be given special allocation," he said, adding that other state banks should not get such priority.
Dr Ahmed suggested that the government, while providing the capital, tag conditions like lending small and marginal farmers only and reporting to the government how much is given to them.
He said performance of employees should be monitored whether they are working properly or not.
syful-islam@outlook.com