Written by The Banking Post
The government has raised the paid-up capital of the state-owned Bangladesh Krishi Bank (BKB) to Tk 15.5 billion in an effort to strengthen the bank’s balance sheet.
The move came through the conversion of Tk 6.5 billion from a previously reserved recapitalisation fund into permanent paid-up capital, as per Article 4 of the Bangladesh Krishi Bank Order, 1973. The Financial Institutions Division (FID) issued a circular to this effect recently.
Officials said the step was taken to improve BKB’s financial health, which has been strained by a massive capital deficit and high default loan ratio. As of June 2025, the bank’s capital shortfall stood at Tk 292.07 billion, while non-performing loans (NPLs) accounted for nearly 50 per cent (49.44%) of its total loan portfolio — about Tk 175.38 billion.
Despite the recapitalisation, experts say the measure barely scratches the surface, addressing less than 2.3 per cent of the bank’s total capital gap. One senior banker described the step as a “fiscal reshuffling” rather than a genuine solution, noting that it fails to address the root causes of the bank’s distress.
BKB, tasked with supporting the agriculture sector, has recorded net losses of around Tk 191 billion over the past six fiscal years, with projections showing an additional Tk 70 billion loss in the current year.
Financial analysts attribute the ongoing crisis to weak governance, political interference in lending, and frequent politically driven staff transfers.
An FID official, however, said the move reflects the government’s intent to keep the specialised bank afloat, even as its growing losses continue to weigh heavily on the national budget.
