Overall shortfall in provision against bank loans swelled by nearly 34 per cent or Tk 22.47 billion in the first quarter (Q1) of the current calendar year.
The aggregate amount of provisioning shortfall rose to Tk 88.62 billion during the January-March period of 2019 from Tk 66.15 billion three months before, revealed the central bank's latest statistics.
"The volume of provision shortfall increased significantly during the period under review mainly due to higher growth of non-performing loans (NPLs) in the banking sector," a senior official of the Bangladesh Bank (BB) told the FE on Wednesday.
During the period under review, the volume of classified loans jumped by more than 18 per cent to Tk 1,108.73 billion in Q1 of the year from Tk 939.11 billion in the preceding quarter.
The central banker also said state-owned commercial banks (SoCBs) have faced more provisioning shortfall than that of private commercial banks (PCBs).
Fourteen out of 57 banks failed to keep requisite provisions against loans, particularly classified ones, in the first quarter of 2019, the BB data showed.
Of them, four are SoCBs and others are PCBs.
A total of 15 banks failed to keep requisite provisions against their loans in the final quarter of 2018.
Under existing BB regulations, banks have to keep 0.25 per cent to 5.0 per cent provision against general category loans while 20 per cent against substandard category, 50 per cent against doubtful loans and 100 per cent against bad or loss category.
The banks usually keep required provisions against both classified and unclassified loans from their operating profits in a bid to mitigate financial risks, according to another BB official.
"The banks may trim down their provisioning shortfall by reducing defaulted loans or increasing eligible collaterals against the credits," the central banker said in reply to a query.
The banks will have to maintain due provisioning against all types of loans to protect the interest of depositors, he added.
"The banks will have to rationalise their costs. At the same time, the quality of assets will be ensured," Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB).
He said this to the FE while replying to a query about the reduction in provisioning shortfall.
Mr Rahman, also managing director and chief executive officer of Dhaka Bank Limited, said there is no alternative but to boost recovery drives to reduce the volume of NPLs.