12 banks face Tk 10,833cr provision shortfall

HM Murtuza | Published: 00:00, Dec 11,2018

 
 

A file photo shows a branch of BASIC Bank in Dhaka. Twelve scheduled banks in the country faced provision shortfall of Tk 10,833 crore in total at the end of July-September quarter this year. — New Age photo

Twelve scheduled banks in the country faced provision shortfall of Tk 10,833 crore in total at the end of July-September quarter this year.
The shortfall meant that the banks lacked adequate capital to keep provision against their defaulted loans.
Provision shortfall in four state-owned banks — Sonali, BASIC, Rupali and Agrani — was Tk 9,312.67 crore or 85.96 per cent of the total shortfall in the banking sector, according to Bangladesh Bank statistics.
Provision shortfall in eight private commercial banks — Bangladesh Commerce, Social Islami, National, AB, Shahjalal Islami, Premier, Mutual Trust and Standard — stood at Tk 1,520.87 crore as on September 30 this year.
According to the central bank regulations, banks are supposed to keep 0.25 per cent to 5.0 per cent provision against loans under general category, 20 per cent against substandard category, 50 per cent against doubtful loans, and 100 per cent against bad or loss category.
Keeping provision against both classified and unclassified loans from banks’ operating profits is a must to mitigate risks.
Provision shortfall in 13 scheduled banks was Tk 10,971 crore at the end of April-June quarter this year.
IFIC Bank and First Security Islami Bank, which faced provision shortfall in the second quarter of the year 2018, managed to improve their financial condition and kept adequate provision against defaulted loans for the third quarter.
Shahjalal Islami Bank, however, faced provision shortfall in July-September as it failed to keep Tk 102.29 crore in provision against defaulted loans.
The bank managed to keep Tk 347.28 crore in provision against Tk 1,027.84 crore classified loans while the required amount of provisioning was Tk 449.57 crore.
Out of the 12 banks, BASIC Bank’s provision shortfall was the highest — Tk 3,548.24 crore.
The entity managed to keep Tk 2,175.37 crore in provision against Tk 8,441.56 crore defaulted loans while the required provision amount was Tk 5,723.61 crore for the July-September period.
Provision shortfall in Sonali Bank was second highest —Tk 3,544.65 crore — as the entity was supposed to keep Tk 7,698.56 crore in provision against Tk 12,777.90 crore defaulted loans whereas it managed to keep only Tk 4,153.92 crore in provision.
Rupali Bank’s provision shortfall was Tk 1,352.97 crore as the entity managed to keep Tk 1,398.18 crore in provision against Tk 4,870.47 crore defaulted loans while the required provision amount was Tk 2751.15 crore for the July-September period.
Agrani Bank managed to keep Tk 3,407.77 crore in provision against Tk 5,648.53 crore defaulted loans while the required amount of provision was Tk 4274.58 crore, meaning that the entity suffered Tk 866.81 crore provision shortfall.
Of the private commercial banks, Bangladesh Commerce Bank faced highest — Tk 421.14 crore — provision shortfall as the entity managed to keep Tk 85.42 crore in provision against Tk 552.43 crore defaulted loans while the required provision amount was Tk 506.56 crore for the quarter ended on September 30.
Socail Islami Bank’s provision shortfall was second highest among the PCBs — Tk 357.50 crore — as the entity kept Tk 726.96 crore in provision against Tk 1,549.25 crore defaulted loans while the required provision amount was Tk 1,084.46 crore for the July-September period.
NBL’s provision shortfall was Tk 261.41 crore as it kept Tk 1,379.54 crore in provision against Tk 2,189 crore defaulted loans while the required provision amount was Tk 1,640.95 crore.
AB Bank’s provision shortfall was Tk 123.96 crore as it kept Tk 891.39 crore in provision against Tk 1605.55 crore defaulted loans while the required provision was Tk 1,015.07 crore.
Premier Bank, MTB and Standard Bank faced provision shortfalls of Tk 96.71 crore, Tk 95.92 crore and Tk 62.21 crore respectively.

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