BRPD Circular Letter No. 23: Single Borrower and Large Loan Exposure Limit

Bangladesh Bank Chief Executive Motijheel, Dhaka-1000 Bangladesh. Ref No.: BRPD Circular Letter No. 23 Banking Regulation and Policy Department 15 May 2024 BRPD Circular Letter No. 23 Date: ------------------- 01 Jyestha 1431 Managing Director / Chief Executive Officer All Scheduled Banks operating in Bangladesh Dear Sir, Subject: BRPD Circular Letter No. 01 dated 16 January 2022.

2. Reference is invited to BRPD Circular Letter No. 01 dated 16 January 2022 cited above. Paragraphs 2(a) and 2(i) of the aforementioned circular respectively redefined the single borrower/group and large loan exposure limits of the bank, which came into effect from 01 April 2022. According to that policy, instructions were given to reduce the loans taken by those borrowers who had exceeded the prescribed single borrower loan limit to within the prescribed limit by 31 December 2022 (by 31 December 2023 in the case of the power sector).

3. Recently, several banks have submitted applications to relax the upper limit of loans to single borrowers/groups, which is contrary to the instructions given through the aforementioned circular. In this context, instructions are being given not to exceed the single borrower loan limit (Single Borrower Exposure Limit) under any circumstances, with the aim of maintaining the stability of the banking sector by reducing large loan risks, maintaining good corporate governance, and ensuring best practices in loan distribution. Furthermore, instructions are given to follow the relevant instructions in the aforementioned circular appropriately in the context of defining groups for the provision of large loans.

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

Yours faithfully, (Mohammad Shahriar Siddique) Director (BRPD) Phone: 9530252