Regulatory Alerts2023-01-05
Added
BRPD Circular Letter No. 01: Loan/Investment Write-off Policy
The document amends the threshold for writing off small loans without filing a court case under the Debt Recovery Court Act, 2003, raising the limit from BDT 200,000 to BDT 500,000 for agriculture, SME, and other sectors where litigation costs are disproportionately high. This exemption applies only when filing a case is not strictly mandatory under the Act, while all other instructions in the original circular remain in force. The directive applies to all scheduled banks operating in Bangladesh and takes effect immediately.
Bangladesh Bank Chief Executive Motijheel, Dhaka-1000 Bangladesh. Ref No: BRPD Circular Letter No. 01 Banking Regulation and Policy Department 05 January 2023 BRPD Circular Letter No. 01 Date: ------------------- 21 Poush 1429 Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh. Dear Sir, Loan/Investment Write-off Policy. We draw your attention to BRPD Circular No. 01 dated 06 February 2019 on the subject mentioned above.
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It was instructed in paragraph 02(x) of the aforementioned circular that if legal action has not been initiated in advance for selected loan/investment accounts for write-off, a case must be filed in accordance with the Debt Recovery Court Act, 2003 before write-off. However, it was also instructed that if the case is not mandatorily litigable under the Debt Recovery Court Act, 2003, any amount of loan/investment up to BDT 200,000/- (Two Lakh Taka) may be written off without filing a case in court, subject to compliance with the instructions mentioned in 2(g) of the said circular.
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Now, considering that the litigation cost for selected small amounts of loans for write-off in other sectors including Agriculture (Non-Farm) and MSME is often high, this instruction is hereby issued that if there is a need to write off small amounts of loans up to BDT 500,000/- (Five Lakh Taka) where the case is not mandatorily litigable under the Debt Recovery Court Act, 2003, such write-off may be done without filing a case in court. However, it must be ensured that instructions mentioned in BRPD Circular No. 01/2019 regarding other matters are complied with.
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Islamic Shariah-based banks may take necessary measures by following the aforementioned policy for their provided investments.
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This instruction is issued under the power granted in Section 45 of the Bank Companies Act, 1991.
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This instruction shall come into force immediately.
Yours faithfully, (Maksuda Begum) Director (BRPD) Phone: 9530252