The central bank yesterday relaxed some rules of loan classification and provisioning to address the concerns of banks and the business community.
Banks will implement the previously announced loan rules from December, instead of September.
Bangladesh Bank reduced the base for provisioning by 5 percentage points to 15 percent. It means the banks will count the provisioning rate at 15 percent of the outstanding balance of the loan, instead of 20 percent earlier.
“Considering the difficulties reported by banks and the business community, certain instructions of the (previous) circular have been reviewed,” BB said in a notice yesterday.
The central bank in a circular in June tightened the loan rules, raising the base for provisioning. The circular had said banks could not calculate interests under special mention accounts as income, and despite rescheduling, banks have to show the loans as classified.
After the circular was issued, the Association of Bankers Bangladesh, a forum of chief executives of banks, and the businesses requested the BB to extend the deadline for implementing the new instructions up to January 1.
“To some extent, some of the rules have been softened,” said a senior BB official.
Banks now can declassify a loan, which has been rescheduled, and the management that has sanctioned the loan can also reschedule it without the board’s approval, said the official.
Maintenance of provision against all unclassified loans of small and medium enterprises has been reduced to only 0.25 percent instead of 1 percent earlier.
Though rescheduling facility of any default loan remains unchanged at up to three times, the time will be counted from the date of rescheduling instead of the date of classification.
-With The Daily Star input
