Dhaka, Bangladesh (BBN)– Overall shortfall in provision against both classified and unclassified loans in the banking system increased by 13.19 per cent in the first-half (H1) of this calendar year.

The amount of provisioning shortfalls rose to BDT 61.92 billion as on June 30 last from BDT 54.70 billion as on December 31, 2016. It was BDT 52.32 billion in the first quarter (Q1) of the ongoing calendar year.

Such amount was BDT 44.46 billion a year before.

Officials said the banks ran short on the provisions following a portion of rescheduled credits entered into non-performing territory along with conditional rescheduling of loans.

Some banks have maintained more provisions against their conditional rescheduling of loans, they added.
A large amount of classified loans had been rescheduled with some conditions set by the Bangladesh Bank (BB) to minimise risks, according to the officials.

“Such rescheduled loans were treated as unclassified ones, but the banks were asked to maintain provisions in accordance with previous status of the loans,” a BB senior official explained.

Only six banks out of 57 have failed to keep requisite provisions against loans, particularly classified ones, according to the official figures.

Of them, three are state-owned commercial banks (SoCBs) and the rest private commercial banks (PCBs).

Under the existing provisions, the banks have to keep 0.25 per cent to 5.0 per cent provisions against general-category loans, 20 per cent provision against substandard category, 50 per cent against doubtful loans and 100 per cent against bad or loss category.

The banks normally keep required provisions against their unclassified and non-performing loans (NPLs) from their operating profits in a bid to mitigate financial risks, another BB official said.

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