Regulatory Alerts2021-01-12
Added
BRPD Circular Letter No. 06: Financial stimulus package to mitigate probable economic impact due to breakout of Novel Corona Virus (COVID-19)
The Bangladesh Bank directs all scheduled banks operating in Bangladesh to ensure that for loans or investments provided under the government's financial stimulus package, only the portion of interest or profit paid by the customer (up to 4.50%) is charged to the customer's account, while the remaining portion is kept in a separate account. Banks are prohibited from charging the entire interest or profit to the customer's account, which causes financial loss to customers, unless the customer fails to pay their share on time, in which case the bank may charge the full amount as a liability. This directive is issued under Section 45 of the Bank Company Act, 1991, and takes effect immediately.
Ref No.: BRPD-Reg-Policy-06 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka. 12 January 2021
BRPD Circular Letter No. 06 Date: --------------------- 27 Poush 1427
Managing Director / Chief Executive All Scheduled Banks operating in Bangladesh.
Dear Sir,
Subject: Financial stimulus package to mitigate probable economic impact due to breakout of Novel Corona Virus (COVID-19).
Reference is drawn to your attention to BRPD Circular No. 08/2020 dated 12 April 2020 on the subject cited above.
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Through the aforementioned circular, the following instructions are issued regarding the provision of loan/investment facilities as working capital to institutions in the affected industries and services sectors under the financial assistance package announced by the Honorable Prime Minister. It is mentioned in the said circular that the interest/profit imposed on the loan/investment distributed under this package will be paid by the customer, and the remaining part will be received by the concerned bank as subsidy from the government.
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It is recently observed that several banks are charging the entire determined interest/profit against the loan/investment provided under the discussed package to the customer's loan/investment account, resulting in customers facing financial loss. Now, to ensure uniform accounting by banks and considering that customers do not suffer financial loss due to the imposition of additional interest/profit, the following instructions are to be followed regarding the imposition of interest/profit only on the loan/investment provided under the discussed package:
"Only the portion of the determined interest/profit payable on the loan/investment paid by the customer (up to 4.50%) may be charged to the customer's loan/investment account, and the remaining portion must be preserved in a separate account. However, if the interest/profit paid by the loan/investment recipient is not paid on time in accordance with the instructions distributed in the said circular, the bank may charge the entire interest/profit to the customer's loan/investment account, and it shall be considered as the customer's liability."
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In addition, the instructions of the aforementioned circular regarding loan/investment recovery, interest/profit recovery, and other related matters are to be followed.
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These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991.
These instructions will take effect immediately.
Yours faithfully,
(Md. Nazrul Islam) General Manager Phone: 9530252