The Prompt Corrective Action (PCA) rules state that banks will be classified on the basis of five indices. They are – Bank Capital Adequacy Ratio, Tier-1 Capital Ratio, Common Equity Tier (CET1), Actual Defaulted Loans and Corporate Governance or Good Governance.
Tier-1 capital ratio is shareholders' capital, which is the sum of the bank's capital and funds protected by profits. The common equity tier (CET1) is perpetual bonds. Banks collect money by issuing those bonds in the market. These bonds never end. Those who buy bonds receive a share of the profits each year.
Earlier on Tuesday, central bank spokesperson Mazbaul Haq had said in a media conference that banks can voluntarily merge with other banks by December this year. Otherwise, the central bank will take steps to merge weaker banks with better performing ones as per its policy next year.
However, he said that even if any bank is merged with another bank, the interests of the depositors will not be harmed, while Bangladesh Bank will take care of the interests of the investors.