BRPD Circular Letter No. 07: Guidelines on Internal Credit Risk Rating System

Banking Regulation and Policy Department
Bangladesh Bank
Head Office
Dhaka.
Ref No.: BRPD-07
BRPD Circular Letter No. 07

February 23, 2022
Date: -------------------
10 Falgun 1428

Managing Director/Chief Executive
All Scheduled Banks operating in Bangladesh.

Dear Sir,

Subject: Guidelines on Internal Credit Risk Rating System.

Your attention is drawn to BRPD Circular Letter No. 14, dated 23/02/2021, on the subject cited above.

2. The negative impact of the global COVID-19 situation continues to prevail in various sectors of the country's economy. In order to overcome this situation, various stimulus packages have been announced by Bangladesh Bank. As the business operations of the past 2020 and 2021 were not as stable as before, some institutions in the industry/business/service sector are facing difficulties in taking new loans or renewing previous loans due to the relatively poor/weak picture of their financial statements. In this context, to accelerate and make business operations nationwide faster and more dynamic, considering the existing financial status of bank borrowers, the following instructions will remain in force until December 31, 2023, in place of the instructions mentioned in paragraphs 1.8 and 1.10(f) of BRPD Circular Letter No. 14/2021, with the aim of taking necessary credit facilities from banks and/or continuing the renewal of existing loans:

1.8 Internal Credit Risk Rating System

Risk Category	Minimum Net Worth to Net Worth Ratio
A	≥75%
B	≥65% to <75%
C	≥50% to <65%
D	<50%

1.10 Non-Performing Loan Criteria

f) For any loan, if the Net Worth to Net Worth Ratio is less than 40%, the loan shall be classified as "D" category.

3. BRPD Circular Letter No. 14, dated 23/02/2021, will be reinstated from January 01, 2024, and the instructions of this Circular Letter will be deemed cancelled.

4. These instructions are issued under the powers conferred by Section 45 of the Bank Companies Act, 1991.

These instructions will come into force immediately.

Yours faithfully,

(Md. Ali Akbar Farazi)
General Manager
Phone: 9530095