Bangladesh Bank Headquarters

Dhaka, Bangladesh (BBN) – Overall shortfall in provision against both classified and unclassified loans in Bangladesh’s banking system jumped by 17.60 per cent or BDT 11.91 billion in the first quarter (Q1) of the current calendar year.

The amount of provisioning shortfall rose to BDT 79.58 billion during the January-March period of 2018 from BDT 67.67 billion three months ago, according to the Bangladesh Bank (BB)’s statistics.

Talking to the BBN, a BB senior official said fresh classified loans pushed up the volume of provision shortfall during the period under review.

He also said public banks have faced more provisioning shortfall than that of private commercial ones.

Twelve out of 57 banks failed to keep requisite provisions against loans, particularly classified ones in the first quarter of 2018, according to the BB data.

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

Nine banks including four public ones had faced such provisioning shortfall during the October-December period of 2017.

During the period under review, the volume of non-performing loans (NPLs) in the banking system jumped by 19.23 per cent to BDT 885.89 billion from BDT 743.03 billion in the preceding quarter.

Under the existing provisions, the 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.