IMF demands ‘swift action’ to recapitalise four banks

The International Monetary Fund (IMF) has said delays in structural reforms — such as “resolving” the four undercapitalised banks — can hamper stability in the country’s financial sector. The resolution of a bank means restructuring a failing lender in a situation where regulators believe there’s no prospect of its recovery. In a detailed Staff Report prepared by an IMF team for the July 12 meeting of its Executive Board to greenlight the $3 billion Stand-By Arrangement (SBA), the Washington-based lender said the full impact of the economic downturn has yet to materialise even though the banking sector appears stable for now. The IMF didn’t name names in the 120-page report, but analysts believe that three of the four undercapitalised banks include Silkbank Ltd and Summit Bank Ltd from the private sector and SME Bank Ltd from the public sector.