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Provisioning shortfall soars 18pc to Tk 79.90b in H1

Higher NPL growth

FE Report | September 13, 2018 00:00:00

Overall shortfall in provisioning against loans in the country's banking system swelled by over 18 per cent or Tk 12.23 billion in the first half (H1) of this calendar year (2018).

The aggregate amount of provisioning shortfall rose to Tk 79.90 billion as on June 30 from Tk 67.67 billion six months ago, according to the central bank's latest statistics.

The shortfall was Tk 79.58 billion as on March 31 this year.

Talking to the FE, a senior official of the Bangladesh Bank (BB) said higher growth in non-performing loans (NPLs) pushed up the amount of provisioning shortfall with the banks.

During the period under review, the volume of classified loans (NPLs) in the banking system jumped by over 20 per cent to Tk 893.40 billion from Tk 743.03 billion as on December 31.

The public sector banks have faced more provisioning shortfall than that of the private commercial banks (PCBs), the central banker added.

A total of 13 banks, out of 57, failed to keep the requisite provisions against loans, particularly the classified ones, in the first six months of 2018, the BB data showed.

Of them, four are state-owned commercial banks (SoCBs) and others are PCBs.

Nine banks, including four public ones, faced such provisioning shortfall in the final quarter (Oct-Dec) of 2017, while the number was 12 in the first quarter (Jan-March) of 2018.

Under the existing BB regulations, the banks have 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.

The banks usually keep the required provisions against both classified and unclassified loans from their operating profits in a bid to mitigate risks.


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