At the end of December 2023, the capital shortfall of ten private and public banks in Bangladesh rose to Tk 39,655 crore, driven by increased risk-based assets and a rise in defaulted loans, according to the Basel III report. The actual deficit is likely higher, as many banks benefit from deferral advantages against provisioning.
Banks in Bangladesh are required to maintain 10% of their risk-weighted assets or Tk 500 crore in capital, as per Basel III policy. Failure to meet this requirement results in a capital shortfall, restricting dividend payments and affecting foreign banking relationships.
Increased defaulted loans and provision deficits are major contributors to the capital deficit. Notable banks with significant shortfalls include Janata Bank with a deficit of Tk 2,750 crore and Bangladesh Krishi Bank with Tk 15,740 crore. The overall capital shortfall has grown by Tk 2,392 crore since the previous quarter.
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