BRPD Circular No. 01: Special Facilities for Institutions of Leather Sector which are Relocated to Tannery Industrial Estate at Savar

Ref No.: BRPD-Circular-01 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka. 22 Poush, 1427 BRPD Circular No. 01 Date:-------------------- January 06, 2021 Managing Director / Chief Executive All Scheduled Banks operating in Bangladesh Dear Sir, Regarding the provision of special facilities for the repayment of bank loans by leather sector institutions relocated to the Tannery Industrial Estate at Savar.

Due to various reasons beyond the control of industrial units relocated to the Tannery Industrial Estate at Savar, many loans/investments are not being repaid regularly and are thus being classified as non-performing. Consequently, in many cases, it is not possible to maintain the normal flow of loans/investments in this sector. In this context, instructions are hereby given to take the following steps to recover irregular loans of the leather sector and reduce them:

1. Special facilities for loan/investment repayment may be provided under this Circular to those leather sector institutions that are unable to continue their business, subject to the following conditions: (a) Special facilities under this Circular may be provided subject to the recovery of a minimum 2% of the loan/investment position as of December 31, 2020, or a down payment in cash; (b) For institutions whose loan/investment position as of December 31, 2020, is up to 5 (five) Crore Taka, a maximum period of 3 (three) years may be provided for debt repayment; and for institutions whose loan/investment position is above 5 (five) Crore Taka, a maximum period of 5 (five) years may be provided for debt repayment; (c) Banks may take decisions regarding the waiver of suspended interest, unapplied interest, and penal interest kept as suspended interest, subject to compliance with existing rules, regulations, and laws, based on the banker-customer relationship; (d) Under no circumstances shall the principal loan/investment be waived; (e) Banks may dispose of assets kept as collateral with the consent of the customer through joint ventures.

2. The following policies shall be followed for the restructuring/rescheduling of loans/investments of industrial units relocated to the Tannery Industrial Estate at Savar that will continue their business: (a) Restructuring/rescheduling facilities under this Circular may be provided subject to the recovery of a minimum 2% of the loan/investment position as of December 31, 2020, or a down payment in cash; (b) Loans/investments may be restructured/rescheduled for a maximum period of 10 (ten) years (1 year + 9 years), including a maximum grace period of 1 (one) year; (c) Banks may take decisions regarding the waiver of suspended interest, unapplied interest, and penal interest kept as suspended interest, subject to compliance with existing rules, regulations, and laws, based on the banker-customer relationship; (d) Under no circumstances shall the principal loan/investment be waived.

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3. Interest at a maximum rate of 9% shall be charged on the (waived remaining) loan/investment position of restructured/rescheduled loans/investments.

4. Those who have already availed of loan restructuring/rescheduling/interest waiver facilities under various policies previously declared for the leather sector shall also be considered eligible for benefits under this Circular.

5. Special facilities mentioned in this Circular shall not be provided to loan/investment recipients created through forgery/fraud or any other type of deception/misconduct.

6. Waived interest must be transferred to a separate interest-free account. The separate account-transferred interest shall be considered finally waived after the full repayment of the loan according to the terms of special treatment or restructuring/rescheduling.

7. For the waiver of interest for state-owned commercial banks and specialized banks, the instructions contained in Memorandum No. Am/Abi/Banking/Branch-1/Various-10/2001-207, dated 29/06/2006, and Memorandum No. Am/Abi/Banking/Admin-1/Various-10/2001(Part-1)/67, dated 12/02/2008, issued by the Banking Division of the Ministry of Finance, shall be applicable.

8. Interest charged against the accounts of loans/investments benefiting under this Circular shall not be transferred to the asset side except for actual recovery.

9. If the customer fails to pay the specified 6 monthly installments/2 quarterly installments after availing of the facilities provided in this Circular, such facilities shall be considered cancelled.

10. If loans are not recovered within the specified time, the existing rules of loan classification and provisioning shall apply, and the bank shall ensure loan recovery according to its existing rules.

11. Customers wishing to avail of special treatment or restructuring/rescheduling facilities under this Circular may apply to the authorizing bank by March 31, 2021, subject to payment of a cash down payment. In this regard, amounts previously deposited for loan/investment repayment shall not be considered as down payments.

12. If a customer applies for loan/investment restructuring/rescheduling or special treatment under this Circular, subject to proper payment of the down payment, the bank shall take a decision on the customer's application within a maximum of 90 (ninety) days from the date of receipt of the application.

13. Pending cases may be resolved on a case-by-case basis during the time of availing benefits under this Circular. If any customer violates any terms of the benefits provided later, all benefits provided in their favor shall be considered cancelled, and stayed cases against the customer shall be revived.

These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991. These instructions shall come into force immediately.

Yours faithfully, (Md. Nazrul Islam) General Manager Phone: 9530252