Janata Bank lost 5,054C last year

State-owned Janata Bank made a net loss of Tk5,054 crore last year as the lender took stock of all the soured credit on its balance sheet and kept provisioning accordingly.

However, it had made a profit of Tk24.64 crore in 2019, as per the data from the Bangladesh Bank.

Janata Bank kept the required provisioning against its bad loans last year, which impacted its capital and profitability, said a senior official of the central bank, seeking anonymity.

As per the central bank regulations, banks have to keep 0.5% to 5% in provisioning against general category loans, 20% against classified loans of substandard category, and 50% against classified loans of doubtful category.

Also read - Janata Bank’s capital shortfall highest among state-owned banks

It is set at 100% against classified loans in the bad or loss category.

At the end of last year, Janata Bank’s defaulted loans stood at Tk13,622.5 crore, which was 24.9% of its total outstanding loans. However, the bank has no provisioning shortfall now.

Janata Bank’s capital shortfall rose at an alarming volume in the fourth quarter of last year.

The actual capital shortfall of Janata Bank, which has the highest volume of default loans in the sector, came to light in the final quarter of 2020, the Bangladesh Bank official added.

In the December quarter, Janata’s capital shortfall stood at Tk5,475.1 crore, rising by a staggering Tk5,217.5 crore in just three months, according to the central bank’s latest data.

The Dhaka Tribune tried to reach the bank’s managing director Abdus Salam Azad over the phone but he did not respond.

The state-run bank’s Chief Financial Officer (CFO) AKM Shariat Ullah recently told Dhaka Tribune: “We have maintained the required provisioning against default loans, which raised the capital shortfall in the final quarter of last year.

“We will apply to the Bangladesh Bank for a deferral facility to keep provisioning against bad loans by this month and the bank will be able to exit from the capital shortfall owing to the regulatory forbearance,” Ullah had said.

Also read - Janata Bank finally took stock of all the bad loans it has on its books

The financial health of the state-run bank has deteriorated mainly due to a number of businesses, including Anon Tex and Crescent Group, defaulting on loans taken from it.

The bank lent upwards of Tk10,000 crore to AnonTex and Crescent Group, going past its single-borrower exposure limit, found a central bank probe.

AnonTex Group, a garment manufacturer, was also involved in money laundering, as per the probe report.

At the end of December 2017, Janata’s bad loans stood at Tk5,818.60 crore. A year later, it amounted to Tk17,224.9 crore owing to the huge loan irregularities.