The government has disbursed Tk 375 million in favour of Bangladesh Commerce Bank Limited (BCBL) to help raise the paid up capital of the bank to Tk 2 billion from the existing Tk 920 million.

The rest of the amount will be collected through offering rights shares aiming to strengthen the financial base of bank.

BCBL authority will issue a rights share at a ratio 1:1.25 of Tk 100 to increase the paid-up capital of the bank existing Tk 920 million to Tk 2 billion.

The banking division of the finance ministry issued a circular on Thursday regarding the issuance of rights share against the existing BCBL shares.

“We needed the fund badly to enhance its capital base,” said a senior official of the BCBL. He also said the bank will provide more facilities to its clients after enhancement of its capital.

Currently, BCBL has Tk 2.0 billion authorised capital and Tk 920 million paid-up capital.

Another official of BCBL said the government was supposed to release the said amount on December 20, but it was done on December 28 by the banking division, which was a violation of the Bank Company Act.

The government owns 32.60 per cent share of BCBL, of which 10.86 per cent is held by each of Sonali, Janata and Agrani bank Limited. The majority share of BCBL is owned by general investors.

Earlier, the Ministry of Finance decided to sell out its whole stake of BCBL, including 10.86 per cent shares of three state-owned banks held by BCBL. The decision of the ministry was recently sent to the cabinet division for approval.

The Prime Minister's Office also wants offloading the government stake, a banking division source said. A group of interested businessmen including a number of law makers have shown interest to buy the government's stake in BCBL.

BCBL has a capital shortfall of Tk 1.63 billion and provision shortfall of Tk 766 million as of June, 2010. The non-performing loan as of June this year was about 28 per cent of the outstanding loan of the bank, according latest data of bank.

BCIL started functioning as an investment company and continued its business until April 1992. Consequent upon its liquidity crisis, Bangladesh Bank suspended its operation in April 1992. As a result, the investors suffered a lot and the employees of the company rendered jobless.

Ultimately, to safeguard the interest of the depositors, employees and the general public, the government intervened and parliament passed an act in 1997 for the establishment of Bangladesh Commerce Bank Ltd.

The bank formally started operation form September 16, 1999 with the paid-up capital of Tk 920 million. Of the amount, Tk 300 million was provided by the government, Tk 100 million jointly by Sonali Bank, Janata Bank and Agrani Bank and the rest Tk 520 million by the depositors.

Presently, three directors represent depositors on the 12-member board of directors of the bank.

The BCBL has 25 branches employing 452 officers and employees.

Source: Daily Sun/ Bangladesh/ 01-Jan-2011