Dhaka, Bangladesh (BBN)– Overall shortfall in provision against both classified and unclassified loans in the country’s banking system swelled by nearly 34 per cent or BDT 22.47 billion in the first quarter (Q1) of this calendar year.

The aggregate amount of provisioning shortfall rose to BDT 88.62 billion during the January-March period of 2019 from BDT 66.15 billion three months before, revealed the central bank’s latest statistics.

Talking to the BBN, a senior official of the Bangladesh Bank (BB) said the volume of provision shortfall increased significantly during the period under review mainly due to higher growth of non-performing loans (NPLs) in the banking sector.

During the period under review, the volume of classified loans jumped by more than 18 per cent to BDT 1,108.73 billion in Q1 of the year from BDT 939.11 billion in the preceding quarter.

The central banker also said state-owned commercial banks (SoCBs) have faced more provisioning shortfall than that of private commercial banks (PCBs).

Fourteen out of 57 banks failed to keep requisite provisions against loans, particularly classified ones, in the first quarter of 2019, the BB data showed.

Of them, four are SoCBs and others are PCBs.

A total of 15 banks failed to keep requisite provisions against their loans in the Q4 of 2018.

Under existing BB regulations, banks have to keep 0.25 per cent to 5.0 per cent provision against general category loans while 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 required provisions against both classified and unclassified loans from their operating profits in a bid to mitigate financial risks.

“The banks may trim down their provisioning shortfall by reducing defaulted loans or increasing eligible collaterals against the credits,” another BB official said.

The banks will have to maintain due provisioning against all types of loans to protect the interest of depositors, he added.