BRPD Circular Letter No. 09: Master Circular on Loan Rescheduling: Transfer of Interest charged on Rescheduled Loans to Income Account

07 April 2022 BRPD Circular Letter No. 09 Date: ---------------- 24 Chaitra 1428 Managing Director/Chief Executive All Scheduled Banks Operating in Bangladesh

Dear Sir,

Subject: BRPD Circular No. 15; Date: 23 September 2012.

Reference is drawn to your BRPD Circular No. 15; Date: 23 September 2012.

2. In the said Circular, it was directed that interest charged against rescheduled loans shall not be transferred to the bank's income account except upon actual receipt. It has recently been observed that some banks are transferring interest charged on rescheduled loans to the income account without actual receipt. Consequently, the bank's income is being shown inflated compared to the actual situation, and the bank's capital base is weakening. Such actions constitute a violation of the instructions mentioned in the Circular and are contrary to the sound credit discipline in the banking sector.

3. Now, in order to ensure that the true picture of the financial position of banks is reflected, to consolidate capital, and in the interest of sound credit discipline in the banking sector, the following instruction is issued: Interest charged against rescheduled loans shall in no way be transferred to the bank's income account unless actually received.

This instruction is issued under the powers conferred by Section 45 of the Bank Company Act, 1991.

Yours faithfully,

(Maksuda Begum) General Manager Phone: 9530252 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka.

Copy to: i.i.n.n.d.t.n.f