10 banks fail to keep required provision in Q3
The overall shortfalls in provision against defaulted loans in the banking sector increased by Tk 819.06 crore or 33.25 per cent in the third quarter of this year with 10 banks failing to keep required provision in the period. According to the latest BB data, the shortfalls rose to Tk 3,281.74 crore as on September 30 from Tk 2,462.68 crore as on June 30.Bangladesh Bank officials said 10 banks failed to keep the required provision as they suffered severe financial crisis in the period because of loan scams and dull business situation amid political unrest.
In the second quarter of this year, the provision shortfalls in the banking sector had declined significantly as the shortfalls were Tk 9,458.22 crore as on March 31.
The provision shortfalls in the state-owned commercial banks increased to Tk 474.92 crore as on September 30 from Tk 391.05 crore as on June 30, those of the private commercial banks to Tk 331.13 crore from Tk 115.60 crore, those of the foreign commercial banks to Tk 295.26 crore from Tk 16.90 crore, and those of the specialised banks to Tk 2,180.43 crore from Tk 1,939.12 crore.
The 10 banks which failed to keep required provision against loans are Sonali Bank, Rupali Bank, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, BASIC Bank, Bangladesh Commerce Bank, Jamuna Bank, National Bank, Premier Bank and National Bank of Pakistan.
The provision shortfalls of National Bank rose to Tk 401.03 crore as on September 30 from Tk 268.86 crore as on June 30, those of National Bank of Pakistan to Tk 320.58 crore from Tk 44.89 crore, those of BASIC Bank to Tk 303.74 crore from a nought.
As per BB regulations, banks have to keep 20 per cent provision against classified loans of sub-standard category, 50 per cent against classified loans of doubtful category and 100 per cent against classified loans of bad or loss category.
A BB official told New Age on Thursday that the provision shortfalls in the banking sector increased in the third quarter as the profitability of banks declined in the period.
The 10 bank, which plunged into the provision shortfall situation, are now facing huge amount of defaulted loans that have made their financial health alarming, he said.
The BB officials said the banking sector had recently witnessed a number of financial scams which pushed up the defaulted loans and provision shortfalls.
Besides, the majority of banks registered lower profits in the first nine month of this year compared with those in the same period a year ago, he said.
Banks usually keep required provision against their general and defaulted loans from their operating profits in a bid to mitigate financial risks, the official said.
Banks sanction and disburse loans to their clients from the depositors’ fund, so they (banks) have to keep the provision for the interest of their depositors, he said.
Twenty-two out of the 30 banks listed with the capital market posted lower profits in the first nine months of this year compared with those in the corresponding period of 2012, the BB data showed.
Under the circumstances, the 10 banks failed to keep required provision against defaulted and general loans in the third quarter, the BB official said.
He said, ‘The political unrest in the run up to the general elections has hit the private sector. So, the businesspeople have failed to repay their loans to banks.’
-With New Age input
