BRPD Circular No. 05: Loan Classification and Provisioning

Website: www.bb.org.bd Banking Regulation & Policy Department Bangladesh Bank Head Office Dhaka

May 29, 2013 BRPD Circular No. 05 Date: ----------------------- Jaistha 15, 1420

Chief Executives All Scheduled Banks in Bangladesh Dear Sir, Loan Classification and Provisioning Please refer to BRPD Circular No.14 dated September 23, 2012 and attached CL formats on the captioned subject. With a view to recognizing potential losses on loan pools of similar risks in a similar manner, following amendments have been made into the circular:

1. Section 4.a)(4) of the circular will be replaced as under : “Rate of provision on the outstanding amount of loans kept in the 'Special Mention Account' will be same as the rates stated in (1), (2), (3) of Section 4.a) which one is applicable. i.e. @ 0.25% against all unclassified loans of Small and Medium Enterprise (SME), @ 5% on the unclassified amount for Consumer Financing, @ 2% on the unclassified amount for Housing Finance, Loans for Professionals to set up business under Consumer Financing Scheme, Loans to Brokerage House, Merchant Banks, Stock dealers, etc. and @ 1% against all other unclassified loans. ”
2. CL-1 format will be replaced by the format attached herewith. This circular will come into force with immediate effect and all other instructions as well as other CL formats attached with BRPD Circulars No.14 and 19 dated September 23, 2012 and December 27, 2012 respectively will remain unchanged. Please acknowledge receipt. Yours sincerely, (Md. Anwarul Islam) Deputy General Manager Phone-9530094

CL-1 BRANCH SUMMARY OF LOAN CLASSIFICATION AND PROVISION AS OF……………….. Ref : BRPD Circular no. 14, 19/2012 BRPD Circular no. 05 /2013 Bank Name: Branch Name : Stamp of Branch Serial No……… (As Provided by Bangladesh Bank) (AMOUNT IN TAKA) SL. No. Categories of Loans Total Balance outstanding Base for provision Amount of Provision required Amount of actual Provision Interest suspense on Unclassified(UC) Classified SMA SS DF B/L UC (standar d) (if any) SMA Classified A/Cs Total Standard SMA SS DF B/L 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 1 Continuous Loan (CL-2) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (CF) III) Loans to BHs/MBs/SDs IV) Other than SMEF, CF, BHs/ MBs,/SDs Sub-total of I, II, III & IV 2 Demand Loan (CL-3) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (CF) III) Loans to BHs/MBs/SDs IV) Other than SMEF, CF, BHs/ MBs,/SDs Sub-total of I, II, III & IV 3 Fixed Term loan (CL-4) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (Other than HF & LP) III) Housing Finance (HF) IV) Loans for professionals to set up business (LP) V) Loans to BHs/MBs/SDs VI) Others than SMEF, CF, HF, LP, BHs/ MBs,/SDs Sub-total of I, II, III, IV, V & VI 4 Short term Agri. Credit and Microcredit (CL-5) I) Short Term Agri. Credit II) Microcredit Sub-total of I & II Sub-total (1+2+3+4) Staff Loan Grand Total Off-Balance Sheet Exposure CHECK LIST Rate of Provision : Form No. No. of Page (s) Form No. No. of Page (s) Particulars Short Term Agri. Credit Consumer financing SMEF Loans to BHs/MBs/ SDs All other Credit CL-2 CL-4 Other than HF,LP HF LP CL-3 CL-5 UC Standard 5% 5% 2% 2% 0.25% 2% 1% SMA - 5% 2% 2% 0.25% 2% 1% NB: CF=CONSUMER FINANCING, HF=HOUSING FINANCE, LP=LOANS FOR PROFESSIONALS TO SET UP BUSINESS, SMA=SPECIAL MENTION ACCOUNT, SS=SUBSTANDARD, DF=DOUBTFUL, B/L=BAD/LOSS, BHs/ MBs,/SDs= LOANS TO BROKERAGE HOUSES/MERCHANT BANKS/STOCK DEALERS. Classified SS 5% 20% 20% 20% 20% 20% 20% DF 5% 50% 50% 50% 50% 50% 50% B/L 100% 100% 100% 100% 100% 100% 100%

CL-1 OBU SUMMARY OF LOAN CLASSIFICATION AND PROVISION AS OF……………….. Ref : BRPD Circular no. 14, 19/2012 BRPD Circular no. 05 /2013 Bank Name: Branch Name : Stamp of Branch Serial No……… (As Provided by Bangladesh Bank) (AMOUNT IN TAKA) SL. No. Categories of Loans Total Balance outstanding Base for provision Amount of Provision required Amount of actual Provision Interest suspense on Unclassified(UC) Classified SMA SS DF B/L UC (standar d) (if any) SMA Classified A/Cs Total Standard SMA SS DF B/L 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 1 Continuous Loan (CL-2) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (CF) III) Loans to BHs/MBs/SDs IV) Other than SMEF, CF, BHs/ MBs,/SDs Sub-total of I, II, III & IV 2 Demand Loan (CL-3) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (CF) III) Loans to BHs/MBs/SDs IV) Other than SMEF, CF, BHs/ MBs,/SDs Sub-total of I, II, III & IV 3 Fixed Term loan (CL-4) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (Other than HF & LP) III) Housing Finance (HF) IV) Loans for professionals to set up business (LP) V) Loans to BHs/MBs/SDs VI) Others than SMEF, CF, HF, LP, BHs/ MBs,/SDs Sub-total of I, II, III, IV, V & VI 4 Short term Agri. Credit and Microcredit (CL-5) I) Short Term Agri. Credit II) Microcredit Sub-total of I & II Sub-total (1+2+3+4) Staff Loan Grand Total Off-Balance Sheet Exposure CHECK LIST Rate of Provision : Form No. No. of Page (s) Form No. No. of Page (s) Particulars Short Term Agri. Credit Consumer financing SMEF Loans to BHs/MBs/ SDs All other Credit CL-2 CL-4 Other than HF,LP HF LP CL-3 CL-5 UC Standard 5% 5% 2% 2% 0.25% 2% 1% SMA - 5% 2% 2% 0.25% 2% 1% NB: CF=CONSUMER FINANCING, HF=HOUSING FINANCE, LP=LOANS FOR PROFESSIONALS TO SET UP BUSINESS, SMA=SPECIAL MENTION ACCOUNT, SS=SUBSTANDARD, DF=DOUBTFUL, B/L=BAD/LOSS, BHs/ MBs,/SDs= LOANS TO BROKERAGE HOUSES/MERCHANT BANKS/STOCK DEALERS. Classified SS 5% 20% 20% 20% 20% 20% 20% DF 5% 50% 50% 50% 50% 50% 50% B/L 100% 100% 100% 100% 100% 100% 100%