As of September, provision shortfall of the eight banks stood at Tk4,381 crore, declining from Tk4,445 crore in June, according to the Bangladesh Bank data.
Though the number of banks having provision shortfall has increased in July-September quarter, the total amount of shortfall declined slightly compared to the previous quarter, thanks to slower growth in default loans.
The banks with provision shortfalls are BASIC Bank, Rupali Bank, Sonali Bank, Bangladesh Commerce Bank, National Bank, Premier Bank, Standard Bank and Bangladesh Krishi Bank.
The scam-hit BASIC Bank had the highest shortfall of Tk3,789 crore as of September, marginally up from Tk3,651 crore in June.
General provisions are balance sheet items representing funds set aside by a company as assets to pay for anticipated future losses. For banks, a general provision is considered to be supplementary capital under the first Basel Accord.
According to a Diagnostic Review Report (DRR) of Bangladesh Bank, BASIC Bank was exempted from maintaining provision shortfall in 2014 considering its negative capital.
The bank was supposed to maintain the shortfall from the year 2015, but it did not do so while the shortfall stood at Tk3,424 crore at the end of the year.
The report stated that BASIC default loan was rising fast but provision against the default loans was not being maintained. As a result the capital base of the bank was becoming more vulnerable.
The government had injected Tk1,200 crore last year as capital support. Despite huge recapitalisation the capital shortfall of the bank was around Tk2,000 crore as of December 2015, according to the DRR.
The capital shortfall of the bank increased to Tk2,423 crore as of September this year, according to the latest report of BASIC bank.
The Capital Adequacy Ratio (CAR) deteriorated to negative 11.20% in September this year against the regulatory requirement of 10%.
The default loan rate of BASIC Bank remained almost unchanged at 52.9% during July-September quarter compared to the previous quarter.
Of the other state banks, Sonali and Rupali saw a slight decrease in provision shortfall in September.
The provision shortfall of Sonali Bank stood at Tk1,028 crore as of September, down from Tk1,092 crore in June this year.
The default loan rate of the bank declined to 27% in September from 30.22% in June.
Rupali Bank faced a shortfall of Tk755 crore in September which was slightly higher of Tk775 crore in June.
The default loan of the bank climbed up to 18.71% in September from 15.31% in June this year.
Of the private commercial banks, the provision shortfall of Bangladesh commerce bank stood at Tk253 crore in September, followed by National Bank Tk168 crore, Premier Bank Tk254 crore and Standard Bank Tk50 crore, according to the Bangladesh Bank data.
Among the specialised banks, only Bangladesh Krishi Bank faced a shortfall of Tk196 crore in September.
Default loan growth in banking sector slowed in July-September quarter of current year as businesses have started to expand overcoming prolonged political setback.
Default loan growth rose by 3.7% or over Tk2,300 crore in the third quarter this year compared to 6.6% growth in the second quarter, according to the central bank data.
The total default loans in the banking sector stood at over Tk65,700 crore as of September which was 10.34% of the total outstanding of Tk6,35,986 crore, according to the Bangladesh Bank data.
The default amount was over Tk63,300 crore or 10.06% in April-June quarter.