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Bangladesh Bank has rejected the capital recovery plans submitted by four state-owned commercial banks—Agrani, Janata, BASIC and Rupali—after finding their proposed timelines and targets too detached from financial reality.

As of December 2024, these four banks carried a combined capital shortfall of Tk31,000 crore, part of a broader effort by the central bank that required all six state banks to outline how they would rebuild capital by 2029. The remaining two—Sonali Bank and Bangladesh Development Bank Ltd (BDBL)—showed a provisioning shortfall of Tk4,763 crore but reported a small capital surplus due to provision forbearance.

Unrealistic Projections

Agrani Bank is among those facing the steepest climb. Despite posting a Tk937 crore net loss in 2024 and achieving only modest profits in the two preceding years, it proposed cutting its capital deficit by Tk6,245 crore within five years. The central bank dismissed the plan, asking for a more realistic version aligned with its actual financial position.

Agrani’s books show just Tk1,752 crore in capital against a required Tk9,444 crore, leaving a Tk7,692 crore shortfall. Yet the bank projected sharp improvements year after year, even while grappling with a Tk12,790 crore provisioning gap. A senior official noted that none of the conditions needed for a rapid turnaround—profit growth, government recapitalisation or major NPL reduction—are currently in Agrani’s favour.

BASIC Bank painted a similarly ambitious picture. With a capital deficit of Tk8,621 crore, it expects to reduce the shortfall to Tk3,257 crore by 2029—even though it has recorded consecutive losses for three years and another deep loss in the first half of 2025. The bank’s managing director said they are working on a “realistic roadmap” to restore profitability, rebuild depositor confidence and contain NPLs.

Janata Bank’s plan is the most puzzling. It openly projects its capital shortfall to double to Tk20,600 crore by 2029, despite suffering a Tk3,071 crore loss in 2024 and another Tk3,000 crore loss in just six months of 2025. The bank offered no explanation for how it intends to reverse the trend.

Rupali Bank, by contrast, submitted a more conservative plan. With a capital shortfall of Tk3,970 crore, it aims to bring the deficit down only modestly by 2029 while maintaining gradual improvements in provisioning. The bank has stayed marginally profitable over the past three years.

Where the Stronger Banks Stand

Sonali Bank, which reported a small capital surplus at the end of 2024, expects to expand it significantly by 2029. It also plans to eliminate its provisioning shortfall during the same period. BDBL, though small, is also aiming to improve its already positive capital position.

Experts Push for Deep Reforms

Economists warn that the sector’s problems cannot be solved by optimistic projections or minor operational adjustments. They call for comprehensive balance-sheet restructuring, tighter risk management and far more aggressive recovery of defaulted loans.

Proposed steps include faster legal action on bad loans, asset sales, specialised recovery units, government recapitalisation, wider use of one-time settlement schemes, and issuing Tier-1 or Tier-2 bonds. Operational reforms—such as cost-cutting, branch rationalisation and boosting fee-based revenue—are also seen as essential.

A Growing Systemic Problem

Across the banking system, capital stress is deepening. As of June, the combined capital shortfall stood at Tk1.55 lakh crore, up from Tk1.10 lakh crore just three months earlier. Twenty-four of the country’s 61 banks—including four state-owned commercial banks, two specialised banks and 18 private banks—failed to meet minimum capital requirements.

The regulator now faces the challenge of compelling long-troubled banks to implement credible reforms, while ensuring that the weaknesses of a few do not spill over into the wider financial system.