Banks run Tk 61.92 billion provisioning shortfall in H1

Dhaka,  Sun,  24 September 2017
Published : 21 Aug 2017, 00:37:43

Banks run Tk 61.92 billion provisioning shortfall in H1

Siddique Islam

Overall shortfall in provision against both classified and unclassified loans in the country's banking system swelled over 13 per cent or by Tk 7.22 billion in the first half (H1) of this calendar year.

By official count the provisioning shortfalls rose to Tk 61.92 billion as on June 30 from Tk 54.70 billion as on December 31, 2016.

In the first quarter (Q1) of the ongoing calendar year, the banks ran Tk 52.32 billion short of the mandatory security funds they ought to maintain under the running banking law.

Such amount was Tk 44.46 billion a year before.

The banks ran short of the provisions following a portion of rescheduled credits having entered into non-performing territory along with conditional rescheduling of loans, according to officials.

They also said some banks have maintained more provisions against their conditional rescheduling of loans.

Meanwhile, a large amount of classified loans had been rescheduled with some conditions set by the Bangladesh Bank (BB) to minimise risks.

"Such rescheduled loans were treated as unclassified, but the banks were asked to maintain provisions in accordance with previous status of the loans," a BB senior official told the FE Sunday while explaining the existing trend in provisioning shortfall.

Only six banks out of 57 have failed to keep requisite provisions against loans, particularly classified ones, according to the official figures.

Of them, three are state-owned commercial banks (SoCBs) and the rest private commercial banks (PCBs).

The amount of provisioning shortfalls of three out of the six SoCBs rose to Tk 73.58 billion during the period under review from Tk 60.81 billion as on December 31 last. It was Tk 64.73 billion as on March 31, 2017.

On the other hand, the total amount of non-performing loans (NPLs) with six state-owned SoCBs rose to Tk 345.81 billion on June 30 last from Tk 310.26 billion in the final quarter of last calendar year. It was Tk 357.16 billion in Q1 of this calendar year.

The SoCBs are now in 'see-saw' position on their financial performances, another BB official said while explaining the current trends in the SoCBs' financial health.   

Under the existing regulations, the banks have to keep 0.25 per cent to 5.0 per cent provisions against general-category loans, 20 per cent provision against substandard category, 50 per cent against doubtful loans and 100 per cent against bad or loss category.

The banks normally keep required provisions against their unclassified and non-performing loans (NPLs) from their operating profits in a bid to mitigate any financial exigency, according to the central banker.

 He also said the banks will have to maintain provisioning against all types of loans to protect the interests of their depositors.
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