BRPD Circular Letter No. 18: Guidelines on Internal Credit Risk Rating System

BRPD Circular Letter No. 18 To: All Chief Executive Officers / Managing Directors All Scheduled Banks operating in Bangladesh Subject, Guidelines on Internal Credit Risk Rating System

Reference is invited to BRPD Circular Letter No. 14 dated [Date Missing] regarding "Internal Credit Risk Rating System for Banks".

2. In order to maintain healthy business operations, banks may consider the following while approving or renewing loans/investments based on the borrower's current ICRRS: a. Performing Enhanced Due Diligence; b. Assessing the financial position of the borrower along with cash flow, financial strength, collateral security, etc., and ensuring compliance with the bank's minimum capital adequacy requirements; c. Ensuring that the loan/investment amount does not exceed the limit approved by the Bank's Management Committee, and verifying that the borrower has properly complied with all covenants related to such loans/investments; d. Maintaining a consolidated list of such loans/investments in the format prescribed by the BRPD (Division-2) for monitoring purposes, considering that both Quantitative and Qualitative factors have been evaluated for the approval of such loans/investments.

3. This directive is issued in accordance with Section 45 of the Bangladesh Bank Order, 1972.

4. This directive shall come into force immediately.

[Signature] Director Central Office Motijheel, Dhaka-1000 Bangladesh website: www.bb.org.bd

Date: ------------------ 19 August 2025 04 Bhadra 1432

Enclosure: Guidelines on Internal Credit Risk Rating System for Banks

Reference is also invited to BRPD Circular Letter No. 12 dated November 20, 2019; Circular Letter No. 60 dated December 31, 2024; and Circular Letter No. 23 dated February 23, 2021, regarding "Guidelines on Internal Credit Risk Rating System for Banks".

In order to maintain healthy business operations, banks are required to perform Enhanced Due Diligence when assessing loans/investments where the borrower's ICRR is rated 'Unacceptable'. This includes evaluating financial position, cash flow, financial strength, collateral security, etc., and ensuring compliance with minimum capital adequacy requirements. The loan/investment amount must not exceed the limit approved by the Bank's Management Committee. Additionally, proper production and recovery of loans/investments must be ensured. For loans/investments exceeding the specified threshold, both Quantitative and Qualitative factors must be considered. Such loans/investments must be included in the consolidated list maintained by the bank as per the format prescribed by BRPD (Division-2).

This directive is issued under Section 45 of the Bangladesh Bank Order, 1972. This directive shall come into force immediately.

Yours faithfully, (Sm: Alauddin) Director (BRPD) Phone: 9530095