Banks' provision shortfall widens
The banking sector's provisioning shortfall went up 18.33 percent in the second quarter of 2017 from a year earlier thanks to high default loans at state banks.
During the April-June period, the total shortfall was Tk 6,191 crore, up from Tk 959 crore in the previous quarter, according to data from the Bangladesh Bank.
Provision refers to the money a bank has to set aside to cover potential losses from loans.
Bad loans require 100 percent provision, while it is 50 percent for doubtful loans.
Three state-run and three private commercial banks -- BASIC, Rupali, Sonali, Bangladesh Commerce, National and Premier Bank -- retained shortfall in April-June like they did in the previous quarter.
The provisioning shortfall of the three state banks widened to Tk 7,363 crore in the second quarter from Tk 6,472 crore in the first quarter. Scam-hit BASIC ran a shortfall of Tk 3,080 crore in April-June.
Sonali and Rupali had a shortfall of Tk 2,809 crore and Tk 1,473 crore respectively.
Of the private banks, Bangladesh Commerce Bank had a provisioning shortfall of Tk 269 crore, followed by National Bank at Tk 726.88 crore and Premier Bank Tk 175 crore, according to BB data.
High default loans contributed to the widening of the provisioning shortfall.
At the end of June, total default loans at state banks stood at Tk 74,148 crore.
It came although default loans declined 0.4 percentage points to 10.13 percent in the second quarter thanks to spirited performance by the state banks in recovery.