The overall shortfall in provision against general and defaulted loans in the banking sector stood at Tk 5,232.26 crore as of March 31, 2017 with six banks failing to keep required provision during the period.
The provision shortfall in the banking sector, however, slightly decreased in the first quarter of this year as the banks faced a shortfall of Tk 5,470.02 crore as of December 31, 2016, according to the latest Bangladesh Bank data.
The banks have to keep provision against its disbursed loans to secure the depositors’ money in line with the bank company act, a BB official told New Age on Wednesday.
Banks sanction and disburse loans to their clients from the depositors’ fund, so they (banks) have to keep the provision for the interest of their depositors, he said.
The six banks which failed to keep required provision against the loans are Sonali Bank, Rupali Bank, BASIC Bank, Premier Bank, Bangladesh Commerce Bank and National Bank, according to the latest Bangladesh Bank data.
The BB data, however, showed that defaulted loans increased to Tk 73,409.06 crore as of March 31, 2017 from Tk 62,172 crore as of December 31, 2016.
The BB official said that provision shortfall in the banking sector had decreased in the first quarter of 2017 as some banks earlier got permission from the central bank to keep their provision phase-to-phase.
The BB gave scope to some banks to keep the provision within two to three years, he said.
The provision shortfall in the banking sector would have increased significantly if the central bank did not facilitate the banks, the central banker said.
As of March 31, 2017, provision shortfall of Sonali Bank increased to Tk 2,103.51 crore from Tk 1,776 crore and that of Rupali Bank rose to Tk 1,495.83 crore from Tk 241.60 crore.
Provision shortfall of BASIC Bank, however, decreased to Tk 2,880.04 crore as of March 31, 2017 from Tk 4,063.28 crore as of December 31, 2016.
Provision shortfall of Bangladesh Commerce Bank increased to Tk 289.93 crore as of March 31, 2017 from Tk 288.56 crore in deficit as of December 31, 2016, that of Premier Bank to Tk 212.70 crore from Tk 47.78 crore and that of National Bank to Tk 511.26 crore from Tk 123.01 crore.
The BB official said that the six banks which saw provision shortfall had earlier suffered huge corruptions.
As per the BB regulations, banks have to keep 0.50 per cent to 5 per cent provision against general category loans, 20 per cent against classified loans of sub-standard category, 50 per cent against classified loans of doubtful category and 100 per cent against classified loans of bad or loss category.
The BB data showed that the provision shortfall in the state-owned commercial banks increased to Tk 6,472.83 crore as of March 31, 2017 from 6,080.76 crore as of December 31, 2016.
The specialised, private and foreign banks, however, posted a surplus amount of provision.
The provision surplus in the private commercial banks increased to Tk 1,130 crore as of March 31, 2017 from Tk 515.37 crore as of December 31, 2016 and that of the foreign commercial banks to Tk 57.18 crore from Tk 42.60 crore.
The provision surplus in the specialised banks, however, unchanged to Tk 52.77 crore between March 31, 2017 and December 31, 2016.
The specialised development banks usually submit their defaulted loan and provision shortfall figures after every six months.
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