Seven commercial banks faced Tk 8,876.51 crore in provision shortfalls against their disbursed loans as of September 30 as the scam-hit BASIC Bank’s shortfall rose further and Standard Bank was included in the list of errant banks in the third quarter (July-September).
The five other banks which faced provision shortfall are Sonali Bank, Rupali Bank, The Premier Bank, Bangladesh Commerce Bank and National Bank.
The overall provision shortfall in the banking sector (by adjusting provision surplus of some of the banks) also rose to Tk 6,344.33 crore as of September 30 from Tk 6,191.69 crore as of June 30.
Banks have to keep provision against their disbursed loans, including the loans which have become defaulted, to secure the depositors’ money in line with the bank company act.
The shortfall in provision in the July-September quarter rose further as banks’ defaulted loans soared by another Tk 6,100 crore to Tk 80,300 crore as of September 30, 2017.
The rise in provision shortfall coupled with the huge amount of defaulted loans has sent the banking sector into a very bad situation, said BB officials.
They said the provision shortfall in the scam-hit BASIC Bank, which has been suffering from capital shortfall amid rising defaulted loans, rose to Tk 3,421.54 crore as of September 30 from Tk 3,080.11 crore as of June 30.
They said that Standard Bank was the latest private bank to be included into the list as the bank faced a provision shortfall of Tk 89.09 crore as of September 30.
Former Bangladesh Bank deputy governor Khondkar Ibrahim Khaled told New Age on Wednesday that the provision shortfall depended on the classified loans and the rise in shortfall was the fallout of the defaulted loan practice by banks.
He said, ‘The provision shortfall in BASIS Bank needs no explanation because the situation of the bank is already very bad. But the provision shortfall in Standard Bank is a matter of concern. The banks entered into the defaulting zone due to accumulation of bad loans which the banks used to keep by rescheduling over the years.’
‘Now there are lesser scopes and at last the loans have become classified,’ Khaled said adding that the central bank was not really liable for the loans but it needed to be more careful in monitoring the banks.
The close monitoring has become urgent in the present condition of the banks, he added.
BB data showed that provision shortfall in another scam-hit state-run bank, Sonali Bank, increased to Tk 2,900.91 crore as of September 30 from Tk 2,809.34 crore as of June 30 while the shortfall in National Bank rose to Tk 861.61 crore from Tk 726.88 crore.
The provision shortfall in Rupali Bank decreased to Tk 1,245.34 crore in September 30 from Tk 1,473.80 crore in June 30, in Premier Bank to Tk 159.4 crore from Tk 174.91 crore and the shortfall in Bangladesh Commerce Bank dropped to Tk 198.62 crore from Tk 269 crore.
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