MoF ready to subscribe Rupali Bank's rights

FE Report

The Ministry of Finance (MoF) will provide Rupali Bank with Tk 2.54 billion next week to subscribe the government's portion of rights shares likely to be offered within a very short time to the bank's shareholders.

The government at present holds 92.25 per cent shares of the bank, a top ministry official said. One rights share will be offered against two existing shares to raise the paid-up capital of the bank in line with the instruction of Bangladesh Bank (BB), the official added.
"Rupali Bank will be given Tk 2.54 billion to subscribe rights shares in favour of the government as it holds now 92.25 per cent shares on the bank," a senior official in the MoF said.
"It is an official decision, taken about a couple of month's back, to provide Rupali Bank with the required fund," he added.

He said Rupali Bank has recently sought the amount from the MoF, referring to the earlier decision in this connection.

Earlier, the central bank in its opinion mentioned that Rupali Bank would be financially strengthened if its paid-up capital is increased through issuing rights shares.
The Banking Regulations and Policy Department of the BB sent the opinion to the MoF after another department of central bank, the Department of Offsite Department, scrutinised all financial indicators of Rupali Bank and approved the proposal relating to rights offer, sources said.

Bangladesh Bank in 2008 issued a circular to increase banks' capital to at least Tk 4.0 billion and out of which Tk 2.0 billion must be paid-up capital by August 11, 2011 to meet the Basel-II requirement.

The banks need to maintain Tk 4.0 billion or 10 per cent of its risk-weighted assets, whichever is higher, as capital.

However, top officials in the Rupali Bank said they are expecting to have the required amount from the government next week as decided earlier.

"We have no alternative to raise the paid-up capital," a top Rupali Bank official said.
After getting the required fund from the finance ministry, an announcement on rights shares will be made after completing all necessary official formalities, the official added.

Source: Financial Express.