Staff Reporter :
Bangladesh Bank (BB) has recently revealed that ten banks, including six private commercial ones, faced a significant shortage in provisions to cover potential loan losses.
This shortfall amounted to approximately 315.49 billion taka at the end of June.
The affected banks included National Bank, BASIC Bank, Agrani Bank, Rupali Bank, Bangladesh Commerce Bank, Dhaka Bank, Standard Bank, Bangladesh Development Bank, IFIC Bank, and Southeast Bank.
According to banking regulations, banks are required to set aside a portion of their deposits as provisions to cover potential losses from defaulted loans. While the minimum requirement is 0.50 per cent, it can be as high as 100 per cent depending on the risk associated with the loan.
However, provisioning requirements can range from 20 per cent to 100 per cent depending on the classification of default loans.
The BB data indicated that the provision shortfall in the banking sector increased by 4.96 billion taka between April and June. This was a rise from 26.59 billion taka at the end of March.
Moreover, the report showed that defaulted loans in the banking sector reached 211.39 billion taka, representing 12.56 per cent of total loans. During the June quarter, classified loans increased by 29.09 billion taka from 182.29 billion taka as of March 30.
The BB data shows that state-owned commercial banks hold the largest share of the classified loans (Tk 1,02,483 crore or 32.77 per cent) followed by specialised banks (Tk 5,756 crore or 13.11 per cent), private commercial banks (Tk 99,921 crore or 7.94 per cent), and foreign commercial banks (Tk 3,229 crore or 4.74 per cent).
The BB data further revealed that state-owned commercial banks held the largest portion of classified loans, followed by specialized banks, private commercial banks, and foreign commercial banks.