The government is trying to improve asset quality of the state-owned banks (SoBs) to reduce their dependency on public fund for recapitalisation, Bangladesh Bank (BB) Governor Fazle Kabir said.

"We are trying to improve their (SoBs') asset quality. No further recapitalisation will be needed then," the BB governor said at a post-budget press conference at Osmani Auditorium in the capital.

His remarks came in reply to a query by newsmen on how long the practice of using public money for recapitalisation of the state-owned banks will continue.

Finance Minister A M A Muhith, in the budget for the upcoming fiscal year (FY), 2017-18, has proposed to keep Tk 20 billion for recapitalisation of the SoBs. A similar allocation was also made in the outgoing FY for recapitalisation of these banks.

The governor said the SoBs' capital shortfall is being met mainly from their own income surplus. Public fund is given to them to meet just a tiny portion of their recapitalisation needs.

Mr Kabir noted that Ministry of Finance and BB have taken steps to improve the performance of the banks, and a remarkable progress is noticed in their performance.

He said the SoBs do many important works of the government, including financing the priority projects. They make payment of all types of government wages, social security-related payments, and receive utility payments without any commission.

"So, sometimes they need recapitalisation," the BB governor opined.

However, economists and experts strongly criticised the government's repeated draining of public money on the SoBs in the name of recapitalisation.

They said influential quarters loot the public fund in connivance with the banks' management. They also opined not to provide public money further to the banks for their recapitalisation.

Former BB governor Dr Salehuddin Ahmed earlier told the FE that draining of public money in the name of the banks' recapitalisation is not a fair move.