State owned scheduled and non scheduled banks would face financial losses over Tk 12,000 crore for interest suspension and halted operation during the month of April and May, bankers estimated.
They also expressed deep concern over liquidity availability as most of the government agencies are withdrawing funds from the state owned banks.
Pointing out about incentive they identified it as a huge burden for state banks.
The Managing Directors in a video conference meeting with officials from Financial Institution Division and Bangladesh Bank presented the rough estimate discussed into the meeting held Thursday.
They also requested the ministry to allow the banks continue 2 per cent rescheduling facility who have no yet been regularized their loan.
“Agrani Bank would face Tk 400 crore operating losses, another 400 for interest exemption and last 100 crore for incentive to be provided to service providing bankers for the Month of April and May,” Mohammad Shams-Ul Islam Managing Director & CEO of Agrani Bank Limited said into the meeting.
“Different government agencies have withdrawn over Tk 2600 deposit from Janata Bank during last couple months which could have bring liquidity shortage to state owned banks in the coming months,” Md. Abdus Salam as the CEO & Managing Director of Janata Bank Limited told the meeting, sources said.
The Sonali Bank would face Tk 800 crore loss, Janata may face 950 crore, Krishi Bank face Tk 900 crore for operation and interest suspension during the locked down.
The other banks including Rupali Bank Limited, Bangladesh Development Bank Limited, Basic Bank Limited, Investment Corporation Bangladesh, Rajshahi Krishi Unnyan Bank, Commerce Bank Limited, Karma Sangsthan Bank, Probashi Kallyan Bank, Ansar BDB Bank , Palli Sanchoy Bank and House Building Finance Corporation chief operating officers joins the meeting and share the loss statements.
On Sunday this week, the Bangladesh Bank (BB) asked all banks to suspend interest on all types of loans for the months of April and May.
Renowned economist and BRAC Bank chairman Dr Ahsan H Mansur banks will need at least three years to recover the losses they have been incurring.
Other nations took decisions like payment of dividend and allowances during the pandemic.
Dr Mansur said banks are facing yet another pressure to meet the expenses pertaining to the COVID-19 allowances for their employees.
The BB circular has instructed the banks to send the accrued interest for the past two months to a blocked account at this stage.
Anis A Khan, a former CEO at the Mutual Trust Bank, said there have multiple options: banks will absorb partially, clients will be charged a part and the government may take a portion as support/subsidy.
“But I don’t think the full amount should be and will eventually be charged from a bank’s profit and loan account,” Mr Khan assumed.
It is widely apprehended that the Bangladesh economy is going to be seriously affected by the Covid-19 fallout. The World Bank has already forecast a fall in economic growth to 2-3 per cent in fiscal 2019-2020 and 1.2-2.9 per cent in 2020-21. However, the actual economic losses will depend on how long this pandemic persists and how financial regulators and leaders worldwide devise policies and strategies to address the issue.