Provision shortfall in six commercial banks increased further by 18.47 per cent to Tk 8,534.08 crore in the second quarter (April-June) from Tk 7,203.34 crore in the first quarter of this year, according to the latest Bangladesh Bank data.
BB officials said that the six banks had been facing provision shortfall for long as they continued to disburse loans flouting rules and regulations.
The six banks are Sonali Bank, Rupali Bank, BASIC Bank, The Premier Bank, Bangladesh Commerce Bank and National Bank.
The overall shortfall in provision against general and defaulted loans in the banking sector also rose by 18.33 per cent to Tk 6,191.69 crore as of June 30 from Tk 5,232.26 crore as of March 31, 2017.
Banks have to keep provision against their disbursed loans to secure the depositors’ money in line with the bank company act, a BB official told New Age on Sunday.
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 amount of defaulted loans in the banking sector also increased to Tk 74,148.54 crore as of June 30 from Tk 73,409.06 crore as of March 31, 2017.
The BB official said provision shortfall in the banking sector increased more in the second quarter of 2017 than that of the first quarter as some banks earlier got permission from the central bank to keep their provision in phases.
But, the banks have failed to utilise the scope of increasing their provision in the second quarter as they
continued to violate rules and regulations in sanctioning and disbursing loans, he said.
As of June 30, 2017, provision shortfall in Sonali Bank increased to Tk 2,809.34 crore from Tk 1,776 crore as of March 31 and that in BASIC Bank rose to Tk 3,080.11 crore from Tk 2,880 crore.
Provision shortfall in Rupali Bank decreased to Tk 1,473.80 crore as of June 30 from Tk 1,495 crore as of March 31, 2017, that in Bangladesh Commerce Bank to Tk 269 crore from Tk 290 crore and that in The Premier Bank to Tk 174.91 crore from Tk 212.70 crore.
Provision shortfall in National Bank increased to Tk 726.88 crore as of June 30 from Tk 511.26 crore as of March 31, 2017.
The BB official said that the six banks facing provision shortfall had earlier faced loan scams, which put an adverse impact on their financial health.
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 provision shortfall in the state-owned commercial banks increased to Tk 7,357.90 crore as of June 30 from Tk 6,472.83 crore as of March 31, 2017.
The private and foreign banks, however, posted a surplus amount of provision, but their additional amount decreased at the end of June.
Provision surplus in the private commercial banks decreased to Tk 1,017.10 crore as of June 30 from Tk 1,130 crore as of March 31, 2017 and that in the foreign commercial banks to Tk 56.27 crore from Tk 57.18 crore.
Provision surplus in the specialised banks, however, increased to Tk 92.84 crore as of June 30 from Tk 52.77 crore as of March 31, 2017.
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