The banking sector faced a combined provisioning shortfall of Tk11,652crore at the end of March, this year, exposing their aggravating financial health.
Fourteen public and private sector banks are included in the list, according to a Bangladesh Bank data.
Of the 14 banks, four are state-owned, while the remaining ten are private commercial banks, according to data from the Bangladesh Bank.
The fourteen banks are: Sonali Bank, Agrani Bank, Rupali Bank, BASIC Bank, AB Bank, Bangladesh Commerce Bank, Dhaka Bank, Mutual Trust Bank, National Bank, Premier Bank, Shahjalal Islami Bank, Social Islami Bank, Standard Bank and the farmers Bank (newly Padma Bank) .
Some of the banks face provisioning shortfall because they lent a large amount of funds in violation of banking regulations, it was alleged.
According to experts, the rising trend of default loans in the banking sector is largely responsible for the huge provisioning shortfall.
According to central bank data, the Agrani Bank’s shortfall stood at Tk1,352.42crore, BASIC Bank at Tk3,397.49 crore, Rupali Bank at Tk1,044.63crore and Sonali Bank at Tk3,340.92crore during the period.
The provision shortfall of AB Bank stood at Tk185crore, Bangladesh Commerce Bank at Tk269.50crore, Mutual Trust Bank at Tk74.72crore, Dhaka Bank at Tk353.39crore, National Bank at Tk687.88crore, Premier Bank at Tk40.09crore, Shahjalal Islami Bank at Tk125.64crore, Social Islami Bank at Tk275crore, Standard Bank at Tk103.28crore and the farmers Bank (newly Padma Bank) provisioning deficit stood at Tk360.65crore.
As per central bank regulations, banks have to keep 0.50% to 5% provision of defaulted loans with Bangladesh Bank against general category loans, 20% against classified loans of sub-standard category, 50% against classified loans of doubtful category, and 100% against classified loans of bad or loss category.
The capital base of the 14 banks will erode significantly as they have to keep provisioning as per the central bank rules, said a Bangladesh Bank official.
As of March this year, the non-performing loans (NPLs) of the country’s banking sector stood at Tk1,10,873.54crore, the highest ever in the country. During the January-March quarter, the NPLs of banks rose by a staggering Tk16,962crore.
Former Bangladesh Bank Governor Salehuddin Ahmed said: “The policies adopted recently by the government and the central bank for banking sector went in the wrong direction. The defaulters were given leverage by these policies. Good borrowers are now feeling discouraged to pay debts.”
The central bank must be rigorous to reduce the default loans and all the facilities extended to the defaulters should be scrapped, he suggested.
