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Eleven banks collectively witnessed a 76.99-per cent or Tk 5,502.46 crore increase in provision shortfalls in the January-March period of 2021 due mainly to a further deterioration in the financial state of the scam-hit Janata Bank.
In the January-March quarter of 2021, Janata Bank became a fresh defaulter in terms of maintaining provision against its classified loans and Probashi Kallyan Bank managed to get rid of the provision shortfall status.
Provision shortfalls in the banks increased to Tk 12,648.7 crore in the March-end quarter of 2021 from Tk 7,146.24 crore in the December-end quarter of 2020.
Apart from Janata Bank, BASIC Bank, Agrani Bank, Rupali Bank, Bangladesh Commerce Bank, National Bank, Dhaka Bank, Mutual Trust Bank, Bangladesh Krishi Bank, Standard Bank and Social Islami Bank also failed to maintain provisions.
Janata Bank, which is holding the highest Tk 13,570.81 crore out of the total Tk 95,085.35 crore in defaulted loans in the banking sector, contributed almost half of the sector’s provision shortfalls.
Janata Bank failed to maintain adequate provision against its defaulted loans in the January-March quarter 2021 due mainly to a spike in its bad loans, the worst type of classified or defaulted loans agaisnt which the maintaining of a 100-per cent provision is a must, taking its provision shortfall to Tk 5,255.17 crore.
A BB official said that Janata Bank’s financial state continued worsening as the bank in the last 10 years approved a large amount of loans in violation of banking rules and regulations.
As a result, 23 per cent of the bank’s total outstanding loans amounting to Tk 57,082 crore turned defaulted.
Over Tk 9,000 crore in loans given to AnonTex and Crescent Group turned defaulted, causing a severe deterioration in the financial state of Janata Bank.
Apart from Janata, provision shortfall of another scam-hit bank BASIC Bank shot up to Tk 3,564.66 crore in the March-end quarter of 2021 from Tk 3,288.16 crore in the December-end quarter of 2020. BASIC Bank’s provision shortfall was the second highest among the eleven banks.
State-owned Agrani suffered the third highest, Tk 1,356.47 crore, in provision shortfall at the end of first quarter of 2021 whereas its provision shortfall was Tk 1,319 crore at the end of fourth quarter of 2020.
Rupali Bank’s provision shortfall dropped to Tk 788.41 crore in the March-end quarter of 2021 from Tk 821.79 crore in the previous quarter.
Provision shortfall of Bangladesh Commerce Bank stood at Tk 458.51 crore, that of National Bank at Tk 388.12 crore, that of Dhaka Bank at Tk 246.23 crore, that of Mutual Trust Bank at Tk 195.49 crore, that of Bangladesh Krishi Bank at Tk 164.73 crore, that of Standard Bank at Tk 157.91 crore and that of Social Islami Bank at Tk 73 crore.
Economists said that the banks would be in pressure in the coming months as the volume of defaulted loans in the banking sector would increase further in the coming quarters.
They also said that the central bank should make sure that the banks comply with its policy on keeping provision against defaulted loans so that the banks can absorb the shock of increased defaulted loans.
Though the overall provision shortfall of all banks usually remains adequate against the requirement as some banks maintain additional provision, the overall shortfall rose to Tk 5,257.79 crore in the March-end quarter of 2021 from Tk 123.49 crore in shortfall in the previous quarter.
