Sonali Bank has sought guarantee worth Tk 60 billion from the government to urgently meet its huge capital shortage, officials said.
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).
Later, the loans are adjusted through receiving 20/30- year-tenure bonds with 5.0 per cent interest rate.
For this, the SBL had to count a loss of Tk 10.59 billion every year, the letter reads. Also, the SBL's financial strength was weakened following some lending irregularities.
Its Ruposhi Bangla Hotel branch lent Hall-Mark Group and five other companies Tk 39.88 billion between 2010 and May 2012 allegedly on forged documents.
Sources concerned said little-known big borrowers embezzled the depositors' money in collusion with some dishonest bank officials. Of the amount, Hall-Mark Group alone allegedly took away over Tk 29.64 billion, T and Brothers over Tk 7.37 billion and Paragon Group over Tk 1.61 billion.
Nakshi Knit also swindled over Tk 799 million, DN Sports over Tk 382 million and Khanjahan Ali Sweaters over Tk 67 million.
In the middle of last February, the government moved to give funds for replenishing capital of the state-owned banks (SoBs) that suffered cash crunch, officials said.
The financial institutions division had held a meeting attended by managing directors of SoBs and representative of Bangladesh Bank. Former senior secretary of the financial institutions division Eunusur Rahman chaired the meeting.
The government had earmarked Tk 20 billion as budgetary allocation for recapitalising the banks in need.
The Basel-III framework has raised capital-adequacy requirement for banks, which most SoBs fall short of.
