Other 1. Ansar VDP Unnayan Bank 2. Bangladesh Samabai Bank Ltd. (BSBL) 3. Grameen Bank 4. Karmasansthan Bank Capital Adequacy
The ability of the banks to discharge successfully their increasing responsibilities depends critically on the success with which they are able to sustain and increase the confidence of their depositors and protect their interests. The bank are required to compulsorily appropriate to the reserve funds and transfer to reserves not less than 20 percent of their profits. This was intended to strengthen the capital base of the banks over time. However, with the passage of time the liabilities of the banks started to rise sharply and the ratio of paid up capital to deposits of scheduled commercial banks steadily declined. the ratio going further down Bangladesh Bank has raised the minimum capital requirement to tk.400 Crores. At the same time Bangladesh has changed over to the capital adequacy norms of the Bank for international settlement. In 1994, Bangladesh switched to the International system of capital adequacy as per recommendation of the Basle Committee on Banking Supervision. Prior to that, bank in Bangladesh were required to maintain capital equivalent to 6% of deposit liabilities. Under the revised system, a bank is required to maintain a ratio of capital to risk weighted asserts of not less than 9% with at 4.5% in core capital or tk. 1.00 billion, whichever is higher. The revised system also captures the off-balance sheet risks. These are, however, converted to balance sheet equivalent before allocating a risk weight. Capital adequacy focuses on building adequate cushion in the form of risk weighted capital with a view to absorb the shocks from unforeseen circumstances. The risks include, inter alia, credit risks, foreign exchange risks, interest rate risks as well as risks arising from off balance sheer exposures. Loan Classification Policies