Dhaka, Bangladesh (BBN) – Overall shortfall in provision against both classified and unclassified loans in Bangladesh’s system jumped by 27.70 per cent in 2016, officials said.
The amount of provisioning shortfalls rose to BDT 54.70 billion as on December 31 from BDT 42.83 billion a year ago, according to latest statistics with Bangladesh Bank (BB).
Only six banks out of 57 have failed to keep requisite provisions against loans, particularly classified ones, according to the officials.
Of them, three are state-owned commercial banks and the rest private commercial banks, they added.
Besides, at least 24 banks run zero level position on provisioning shortfall or surplus as on December 31, 2016.
Talking to BBN, a senior BB official said some banks have maintained more provisions against their conditional rescheduling of loans to minimize their risks.
A large amount of non-performing loans had already been rescheduled with some conditions set by the central bank to protect the interest of depositors.
Such rescheduled loans were treated as unclassified ones, but the banks were asked to maintain provisions in accordance with previous status of the credits, the BB official explained. “New classified loans also pushed up the amount of provision shortfalls with the banks.”
Under the existing BB regulations, 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 NPLs from their operating profits in a bid to mitigate financial risks, according to another BB official.