BRPD Circular No. 07: Master Circular on Loan Classification and Provisioning

Page 1 of 10 Website: www.bb.org.bd Banking Regulation & Policy Department Bangladesh Bank Head Office Dhaka

June 14, 2012 BRPD Circular No. 07 Date : ---------------------- Jaishtha 31, 1419

Chief Executives All Scheduled Banks in Bangladesh

Dear Sir,

Master Circular: Loan Classification and Provisioning

Please refer to BRPD Circular No.05 dated June 05, 2006 and attached CL formats on the captioned subject. Bangladesh Bank has, over the la st several years, positioned the banks on a path towards higher regulatory capital ratios and a more precise calculation of each individual bank’s need for capital, through a gradual im plementation of inte rnationally recognized ca pital standards. The enforcement of a s tricter regulatory capital re gime also requires m easures to improve the accuracy of financial d ata which are used in ternally, stated in the aud ited financial statem ents and reported to Bangladesh Bank as per rules. For both the bank’s m anagerial and Bangladesh Bank’s supervisory purposes, as well as for accur ate valuation of a bank’s capital in all of its financial reports is necessary. An accurate valuation of capital relies, in tur n, on an accurate valuation of assets. Loan￾loss provisioning – the recognition that some or all of the required payments on a loan may never be made – is the single most important aspect of asset valuation to bankers and bank supervisors. It is important because loans typically make up 50% or more of the total assets of the bank. Basel II and Basel III devote a gr eat d eal of atten tion to the dis tinction be tween “expec ted losses” and “unexpected losses” on the bank’s loan portfolio. Th e purpose of provisioning is to take into account expected losses. Expected losses can be assigned to loans based on a loan classification system, which has been utilized in Bangladesh for many years and is being updated with this circular.

Page 2 of 10 Bangladesh Bank also wishes to stress that it is the responsibility of bank management to adopt and implem ent proper accounting and re porting, and that correct classification and provisioning is a part of that re sponsibility. Loan classification and provisioning must be a key component of a regular internal lo an review process that looks at the current likelihood that the borrower will r epay. The value of the f ormed a llowance that re sults f rom the provisionin g process should reflect all expected losses resulting from credit exposures. Bangladesh Bank has established requirements for general loan loss provisions, in certain percentages, for certain catego ries of loans th at are unclassified or in the Special Men tion Account. As the name suggests, general provisions are assigned to take into account the expected losses on pools of loans that are thought to have si milar characteristics. The characteristics of each individual loan are not analyzed. Put di fferently, it is not known or even assum ed which loan or loans in the pool are going to result in loan losses; it is simply taken as given that in such large pools, even those currently unclassified, there will undoubtedly be individual loans that in the future will not be repaid. Ideally , the percen tages of provision that are applied to each pool are determined based on historical loss experience of similar loan pools. Banks are encouraged to calculate th ese historical lo ss exp eriences on the loan pools for which Bangladesh Bank has indicated general provision percen tages, and use these data if they result in higher provisions than are required in this circu lar. Because general prov isions are not form ed based on expectations of loss on any individua l loan, they are allowed to be included in the calculation of Tier 2 capital, subject to som e restrictions. In contrast, specific provisions (established on loans that are classified as Sub-standard, Doubtful or Bad/Loss) are set up on a loan-by-loan basis after careful analysis of each individual loan’s probability of repayment. For loans placed into any of these classification categories, weaknesses have been identified that cast doubt on the borrower’s ability or intent to m ake all contractual paym ents in a tim ely manner. For this reason, specific provisions are not allowed to be included in the calculation of Tier 2 capital.

1. Categories of Loans and Advances :

All loans and advances will be grou ped into four (4) categories for the purpose of classification, namely- (a) Continuous Loan (b) De mand Loan (c) Fixed Term Loan and (d) Short-term Agricultural & Micro- Credit. a) Continuous Loan: The loan accoun ts in which transactions may be m ade within certain limit and have an expiry date for ful l adjustment will be treated as Continuous Loan. Exam ples are: Cash Credit, Overdraft, etc.

b) Demand Loan: The loans that become repayable on demand by the bank will be treated as Demand Loan. If any contingent or any other liabilities are turned to forced loan (i.e. without any prior approval as regular loan) those too will b e treated as Demand Loan. Such as : Forced Loan

Page 3 of 10 against Imported Merchandise, Payment against Do cument, Foreign Bill Purchased, and Inland Bill Purchased, etc. c) Fixed Term Loan: The loans, which are repa yable within a specific tim e period under a specific repayment schedule, will be treated as Fixed Term Loan.

d) Short-term Agricultural & Micr o-Credit: Sho rt-term Agricultural Credit will include the short-term credits as listed under the Annual Credit Programme issued by the Agricultural Credit and Financial Inclusion Departm ent (ACFID) of Bangladesh Bank. Cre dits in the agricultural sector repay able within 12 (twelve) m onths w ill also be in cluded here in. Short-te rm Micro￾Credit will include any micro-credits not exceeding an amount determined by the ACFID of Bangladesh Bank from time to time and repayable within 12 (twelve) months, be those termed in any nam es such as N on-agricultural cred it, Se lf-reliant Credit, W eaver's Credit or Bank' s individual project credit. 2. Basis for Loan Classification: a) Objective Criteria: (1) Past Due/Over Due: (i) Any Continuous L oan if not repaid/r enewed within the fi xed expiry date for repayment or af ter the dem and by the bank will be tr eated as pas t due/ove rdue f rom the following day of the expiry date. (ii) Any D emand Loan if not repaid with in the fixed expiry date for repaym ent or after the de mand by the bank will b e treated as past due/ov erdue from the f ollowing day of the expiry date. (iii) In ca se of any insta llment(s) or part of installment(s) of a Fixed Term Loan is not repaid within the f ixed expiry date, the amount of unpaid installm ent(s) will be treated as past due/overdue from the following day of the expiry date. (iv) The Sh ort-term Agricu ltural an d Micro -Credit if not repaid within the f ixed expiry da te f or repaym ent will b e c onsidered p ast due /overdue af ter s ix m onths of the expiry date. (2) All unclassified lo ans other than Special Mention Account (SMA) will be treated as Standard. (3) A Continuous loan, De mand loan or a Te rm Loan which will rem ain overdue f or a period of 02 (two) m onths or m ore, will b e put into th e "Special Men tion Account(SMA)" and interest accrued on such loan will be credited to Interest Suspense Account, instead of crediting the same to Income Account. This will help banks to look at accounts with potential problems in a focused manner and it will capture early warn ing signals for accounts showing first s ign of

Page 4 of 10 weakness. Loans in the "Special Mention Account (SMA)" will have to be reported to the Credit Information Bureau (CIB) of Bangladesh Bank. (4) Loans in the "Special Mention Account" and “Sub-Standard” will not be treated as defaulted loan for the purpose of section 27KaKa(3) [read with section 5(GaGa)] of the Banking Companies Act, 1991. (5) Any continuous loan will be classified as: i. ‘Sub-standard’ if it is past due/overdue for 03 (three) months or beyond but less than 06 (six) months. ii. ‘Doubtful’ if it is past due/overdue for 06 (six) months or beyond but less than 09 (nine) months iii. ‘Bad/Loss’ if it is past due/overdue for 09 (nine) months or beyond.

(6) Any Demand Loan will be classified as: i. ‘Sub-standard’ if it remains past due/overdue for 03 (three) months or beyond but not over 06 (six) m onths from the date of expiry or claim by the bank or from the date of creation of forced loan. ii. ‘Doubtful’ if it re mains past due/overdue for 06 (six) m onths or beyond but not over 09 (nine) m onths from the date of expiry or claim by the bank or from the date of creation of forced loan. iii. ‘Bad/Loss’ if it remains past due/overdue for 09 (nine) months or beyond from the date of expiry or claim by the bank or from the date of creation of forced loan.

(7) In case of any installm ent(s) or part of installment(s) of a Fi xed Term Loan is not repaid within the due date, the am ount of unpaid installment(s) will be term ed as ‘past due or overdue installment’. In case of Fixed Term Loans: - i. If the am ount of past due installm ent is equal to or m ore than the amount of installment(s) due within 03 (three) months, the entir e loan will be classif ied as ''Sub-standard''. ii. If the am ount of past due installm ent is equal to or m ore than the amount of installment(s) due within 06 (six) months , the entire loan will be cla ssified as ''Doubtful". iii. If the am ount of ' past due installm ent is equal to or m ore than the am ount of installment(s) due with in 09 (nine) months , the entir e loan will be c lassified as ''Bad/Loss''. Explanation: If any Fi xed Term Loan is repaya ble on monthly installm ent basis, the amount of i nstallment(s) due w ithin 06 (six) months will be equal to the sum of 06 m onthly installments. Si milarly, if the loan is repayabl e on quarterly installm ent basis, the am ount of installment(s) due within 06 (six) months will be equal to the sum of 2 quarterly installments.

Page 5 of 10 (8) The Short- term Agricu ltural an d Micro-Cr edit will be considered irregu lar if not repaid with in the due date as s tipulated in th e loan ag reement. If the said irregular status continues, the credit will be classified as ' Substandard ' after a period of 12 months, as 'Doubtful' after a period of 36 months and as ' Bad/Loss' after a period of 60 months from the stipulated due date as per the loan agreement.

b) Qualitative Judgement: If any uncertainty or doubt aris es in respect of recovery of any Continuous Loan, Demand Loan or Fixed Term Loan, the same will have to be c lassified on the basis of qualitative judgement be it classifiable or not on the ba sis o f objective criter ia. If a ny situa tional change s occur in the stipulations in terms of which the loan was extended or if the capital of the borrower is impaired due to adverse conditions or if the value of the collateral decreases or if the recovery of the loan becomes uncertain due to any other unfavourable situ ation, the loan will have to be classified on the basis of qualitative judgement . Despite the probability of any loan being affected due to the re asons stated above or for any other reasons, if there is any hope for change of the existin g condition by resorting to proper steps, the lo an, on the b asis of qualitative judgement, will be classified as ' Sub-standard '. But even after resorting to proper steps, there exists no certainty of total recovery of the loan, it will be classified as ' Doubtful ' and even after exerting the all-out effo rts, there exists no chance of recovery, it will be classified as ' Bad/Loss ' on the basis of qualitative judgement. For incorporating qualitative judgment, banks must focus on the likelihood that the borrower will repay all amounts due in a tim ely m anner, us ing their own judgm ent and t he following assessment factors: (1) Special Mention i. Assets m ust be classified no higher than Special Mention if any of the following deficiencies of bank managem ent is present: the loan was not m ade in com pliance with the bank’s in ternal policies; failure to m aintain ad equate and enforceable docum entation; or po or control over collateral. ii. Assets m ust be classified no higher than Special Mention if any of the following deficiencies of the oblig or is present: occasional overdrawn within the p ast year, below-average or declining profitability; barely acceptable liquidity; problems in strategic planning. (2) Sub-standard i. Assets m ust be classified no higher than Sub-standard if any of the following deficiencies of the obligor is present: recu rrent overdrawn, low accou nt turnover, com petitive difficulties, location in a volatile industry with an acute d rop in demand; very low prof itability that is also declining ; inadequa te liquidity; ca sh f low les s than rep ayment of princ ipal and interest; weak m anagement; doubt s about integrity of m anagement; conflict in corporate governance; unjustifiable lack of external audit; pending litigation of a significant nature. ii. Assets m ust be classified no higher than Sub-standard if the prim ary sources of repayment are insufficient to service the debt an d the bank must look to secondary sources of

Page 6 of 10 repayment, including collateral. iii. Assets must be classified no higher than Sub-standard if the banking organization has acquired the asset without the types of adequa te documentation of the obligor’s net worth, profitability, liquidity, and cash flow that are required in th e banking organization’s lending policy, or there are doubts about the validity of that documentation. (3) Doubtful Assets must be classified no higher than Doubt ful if any of the following deficiencies of the obligor is present: perm anent overdrawn; location in an industry with poor aggregate earnings or loss of m arkets; serious competitive problems; failure of key products; operational losses; illiq uidity, inc luding th e ne cessity to se ll asse ts to m eet opera ting expenses; cash flow less than required interest payments; very poor m anagement; non-cooperative or hostile management; serious doubts of the integrity of m anagement; doubts about true ownership; complete absence of faith in financial statements. (4) Bad/Loss Assets must be classified no higher than Bad/ Loss if any of the following deficiencies of the obligor are p resent: the obligor seeks new loans to finance operational losses; location in an industry that is disappearing; location in the botto m quartile of its industry in term s of profitability; technological obsol escence; very high losses; asse t sales at a loss to m eet operational expenses; cash flow less than pr oduction costs; no repaym ent source except liquidation; presence of money laundering, frau d, embezzlement, or other crim inal activity; no further support by owners. c) Improvement in Classification: From time to time, in the judgment of the bank, the condition of a loan may improve and it may be justified to move it to a more favorable classification category. The d ecision to move a loan to a more favorable classification category must be accompanied by analysis showin g that there has been improvement in the paym ent performance of the loan and/or in the financial condition of the borrower. The decision to move a loan from Bad/ Loss to Doubtful or Substandard, or from Doubtful to Substandard, m ay, with appropri ate justification, be ta ken by the Chief Credit Officer, with the concurrence of the Chief Financial Officer. The decision to move a loan from Substandard, Doubtful, or Bad/Loss to Special Men tion Account or to declassify it com pletely must be taken by the B oard of Directors, with a ppropriate justification presented b y the b ranch manager who originated the loan in question and the Managing Director. A bank m ay request the concerned Departm ent of Banking Inspection of Bangladesh Bank to review the classification of any loan for which there is a disagreement on classification that is not resolved during the on-site inspection. Bangladesh Bank will respond to the bank within 15 days of receiving such request. However, in any case where there is a lingering disagreement between the classification determ ined by bank m anagement and the class ification determ ined by Bangladesh Bank, the judgm ent of Bangladesh Bank will prevail. Any loan classified during

Page 7 of 10 Bangladesh Bank’s on-site inspection on the basis of qualitative judgem ent cannot be declassified without the consent of Bangladesh Bank. 3. Accounting of the Interest of Classified Loans: If any loan or advance is classified as 'Sub-standard' and 'Doubtful', interest accrued on such loan will be credited to Interest Suspense Account, in stead of crediting the same to Incom e Account. In case of rescheduled loans the unr ealized interest, if any, will be credited to Interest Suspense Account, instead of crediting the same to Income Account. As soon as any loan or advance is classified as ' Bad/Loss', charging of interest in the sam e account will cease. In case of filing a law-su it for recovery of such loan, interest for the period till filing of the suit can be charged in the loan account in order to file the same for the amount of principal plus interest. But intere st thus charged in the loan acc ount has to be preserved in the 'Interest Suspense' account. If any interest is charged on any ' Bad/Loss' account for any other special reason, the same will be preserved in the 'Interest Suspense' account. If classified loan o r part of it is recovered i.e., real deposit is effected in the lo an account, first the interest charged and accru ed but not ch arged is to be recovered fr om the said depos it and the p rincipal to b e adjusted afterwards.

4. Maintenance of Provision:

a) General Provision: Banks will be required to m aintain General Provision in the following way : (1) @ 1% against all unclassified loans (other than loans under Consum er Financing, Loans to Brokerage House, Merchant Banks, Stock dealers etc. and Special Mention Account.) (2) @ 5% on the unclassified amount for Consumer Financing whereas it has to be maintained @ 2% on the unclassified am ount fo r (i) Housing Finance and (ii) Loans for Professionals to set up business under Consumer Financing Scheme. (3) @ 2% on the unclassified am ount for Lo ans to Brokerage House, Merchant Banks, Stock dealers, etc. (4) @ 5% on the outstanding amount of loans kept in the 'Special Mention Account' after netting off the amount of Interest Suspense. (5) @1% on the off-balance sheet exposures. (Provision will be on the total exposure and amount of cash margin or value of eligible collateral will not be deducted while computing Off￾balance sheet exposure.) b) Specific Provision: Banks will m aintain provision at the following rates in r espect of classified Continuous, Demand and Fixed Term Loans:

(1) Sub-standard : 20% (2) Doubtful : 50%

Page 8 of 10 (3) Bad/Loss : 100% c) Provision for Short-term Agricultural and Micro-Credits: (1) All credits except ' Bad/Loss' (i.e. ' Doubtful', ' Sub-standard', irregular and regular credit accounts) : 5% (2) 'Bad/Loss' : 100%

5. Provisions to Cover All Expected Losses: The expressed m inimum percentages of provisi ons in Paragraph 4 for exposures in each classification catego ry are abso lute m inimums, a nd banks are encou raged to set aside high er provisions if expected losses on the loan pools (for general provisi ons) or indivi dual loans (for specific provisions) warrant.
6. Base for Provision:

The provision will be maintained at the above rate on the balance calculated as th e greater of the following two amounts: a) the outstanding balance of th e loan less the amount of Inte rest Suspense and the value of eligible collateral; and b) 20% of the outstanding balance of the loan.

7. Eligible Collateral :

In the definition of ' Eligible Collateral' as mentioned in the above paragraph the following collateral will be included as eligible collateral in determining base for provision:

-100% of deposit under lien against the loan -100% of the value of government bond/savings certificate under lien -100% of the value of guarantee given by Government or Bangladesh Bank -100% of the market value of gold or gold ornaments pledged with the bank.

• 50% of the market value of easily m arketable commodities kep t under control o f the bank
• Maximum 50% of the market value of land and building mortgaged with the bank
• 50% of the average m arket value for last 06 m onths or 50% of the face value, whichever is less, of the shares traded in stock exchange.

Page 9 of 10 Determination of Market Value of Eligible Collateral : In determ ining m arket value of easily m arketable commodities, land and building, banks are advised to follow the instructions mentioned below: (a) Easily m arketable goods will m ean pled ged, easily encashable/saleable goods th at remain under full control of the bank. However, while the concerned bank branch official will conduct periodic inspection to veri fy as to whether requirem ents have been m et such as the suitability of goods for use, expiry period, appr opriateness of documentary evidences, and up to date insurance cover, the same will have to be assessed by the professional assessor from time to time. (b) For land and building, banks will have to ensure whether title documents are in order and concerned land and building will have to be valued by the prof essional valuation firm along with completion of proper documentation in favour of the bank. In the ab sence of a professional valuation firm , a certif icate in favour of such valuation will hav e to be collected from a specialized engineer. Nevertheless, tem porary hous es including tin-shed structure shall not be shown as building. (c) In ord er to f acilitate the on -site inspection by Bangladesh Bank’s Departm ent of Banking Inspection, banks are also advised to m aintain a com plete statem ent of eligible collateral on a separa te sheet in the concerned lo an file. Infor mation such as a description of eligible collater al, their assessm ent by a r ecognized firm , m arketability of the commodity, control of the bank, and reasons for considering eligible collateral etc. will have to be included in that sheet.

8. In term s of the above policies, the banks w ill conduct their classification- activities on quarterly b asis. These activitie s must includ e periodic revalu ations of collater al, no less frequently than one year for m ovables and no less frequently than three years for immovables. The classif ication of ea ch individu al loan m ust be justif ied in writing and the docum entation must contain the signatures of both the person s ass igning the classification and the person reviewing it. These written ju stifications must be m aintained in the loa n files and be available for viewing by the Bangladesh Bank inspection team s. In this connection revised form s for loan classification, provisioning and inte rest suspense i.e CL-1 to CL-5 have been enclos ed herewith which will replace the existing ones. (i) CL-1 is the compilation/summary of 5 other forms. This form is for showing summary of classification status f or different loan categories m entioned ea rlier along with staff loan. (ii) CL-2 is for reporting loan classification of Continuous Loan (iii) CL-3 is for reporting loan classification of Demand Loan (iv) CL-4 is for reporting loan classification of Term Loan (v) CL-5 is for reporting loan classification of Short-term Agricultural and Micro-Credit.

Page 10 of 10 Bank branches shall s end the com pleted forms (CL-1 to CL-5) to the ir Head Office. The Head Offices of banks should m ake arrangem ents for scrutiny of all the for ms prepared by the branches. Where necessary, they should carry out corrections and ensure m aintenance of the corrected forms in the records of the branch. Af ter scrutiny of all forms (CL-1, CL-2, CL-3, CL￾4 and CL-5 ) prepared by branches and being satis fied with the results, they should prepare a consolidated position of classifi cation, provisions and interest suspense using form CL-1 and send the same to the Banking Regulation and Policy Department of Bangladesh Bank and upload in Enterprise Data W arehouse (EDW) of Banglade sh Bank. Banks are also advised to preserve the CL statem ents in both their Head Offices and branches for inspection by the Bangladesh Bank inspection team. 9. Banks having Offshore Banking Unit (OBU) wi ll report to Bangladesh Bank in si milar way in a separate CL-1 named OBU SUMMARY OF LOAN CLASSIFICATION AND PROVISION (enclosed h erewith). In this regard , concer ned banks will prepar e and send data on OBU transactions for A, B and C type in separate worksheets along with the consolidated statem ent through the said separate CL-1 named OBU SUMMARY OF LOAN CLASSIFICATION AND PROVISION to the Banking Regulation and P olicy Department and Credit Inform ation Bureau (CIB) of Bangladesh Bank.

10. Banks are advised to subm it detailed statem ents through CL-1 in respect of classification, provision and interest suspense accounts within 25 days from th e reference date and ensure correct and tim ely subm ission of CL-1 faili ng to which penalty may be im posed on the concerned non compliant bank.

11. Banks shall submit the consolidated quarterly statement on the CL-1 format starting from the September quarter end, 2012.

This policy shall com e into f orce with imm ediate effect and the applicability of BRPD Circular No. 05 dated June 06, 2006, BRPD Circular No. 10 da ted September 18, 2007, BRPD Circular No. 05 dated April 29, 200 8 and BRPD Circular No. 32 dated October 27, 2010 will be considered as void. Please acknowledge receipt. Yours sincerely, (Md. Anwarul Islam) Deputy General Manager Phone-7120377

CL-1 BRANCH SUMMARY OF LOAN CLASSIFICATION AND PROVISION AS OF……………….. Ref : BRPD Circular no. 07/2012 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) Classif ied 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% 1% 2% 1% SMA - 5% 5% 5% 5% 5% 5% 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%

Ref : BRPD Circular no. 07/2012 CL-2 RETURNS FOR CLASSIFICATION OF CONTINUOUS LOANS AS OF……………….. Page No. Bank Name: Branch Name : Stamp of Branch Serial No……… (As Provided by Bangladesh Bank) (Amount in Taka) Sl. No. Name of borrower and NID Nature of Loans and Advances Loan Identification No. Date of sanction /last renewal/ rescheduling (if any) DD/MM/YY Amount sanctioned /renewed/ rescheduled (if any) Balance Outstanding as of reference date Date of Expiry DD/MM/YY Period of arrears (in months) (Ref. Date-Col. 8) Preliminary status of Classification Final Classification Objective Criteria Qualitative Judgement Classification Status Basis for Classification 1 2 3 4 5 6 7 8 9 10 11 12 13 Total Sl. No. Amount Cumulative interest suspense as of reference date Value of eligible collateral (to nearest amount) Base for Provision for Remarks Unclassified (UC) Classified Standard SMA Sub￾standard (SS) Doubtful (DF) Bad/Loss (B/L) UC (Standard) (If any) SMA Classified A/Cs Total SMA Col. (15-20) Sub￾standard (SS) Col. (16-21-23) Doubtful (DF) Col. (17-21-23) Bad/Loss (B/L) Col. (18-21-23) 1 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Total

Ref : BRPD Circular no. 07/2012 CL-3 RETURNS FOR CLASSIFICATION OF DEMAND LOANS AS OF……………….. Page No. Bank Name: Branch Name : Stamp of Branch Serial No……… (As Provided by Bangladesh Bank) (Amount in Taka) Sl. No. Name of borrower and NID Nature of Loans and Advances Loan Identification No. Date of sanction/ rescheduling (if any) DD/MM/YY Amount Disbursed/ rescheduled (if any) Balance Outstanding as of reference date Claim date DD/MM/YY Period of arrears (in months) (Ref. Date –Col.8) Preliminary status of Classification Final Classification Objective Criteria Qualitative Judgement Classification Status Basis for Classification 1 2 3 4 5 6 7 8 9 10 11 12 13 Total Sl. No. Amount Cumulative interest suspense as of reference date Value of eligible collateral (to nearest amount) Base for Provision for Remarks Unclassified (UC) Classified Standard SMA Sub￾standard (SS) Doubtful (DF) Bad/Loss (B/L) UC (Standard) (If any) SMA Classified A/Cs Total SMA Col. (15-20) Sub￾standard (SS) Col. (16-21-23) Doubtful (DF) Col. (17-21-23) Bad/Loss (B/L) Col. (18-21-23) 1 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Total

Ref : BRPD Circular no. 07/2012 CL-4 RETURNS FOR CLASSIFICATION OF FIXED TERM LOANS AS OF……………….. Page No. Bank Name: Branch Name : Stamp of Branch Serial No……… (As Provided by Bangladesh Bank) (Amount in Taka) Sl. No. Name of borrower and NID Nature of facilities Loan Identification No. Date of sanction /last rescheduling DD/MM/YY Principal Amount/ Rescheduled Amount Balance Outstanding as of reference date Installment Date of first Repayment due Period since 1st Repayment due (Ref. date – col.10) (in months) Amount paid since sanctioning /Last rescheduling Time equivalent of amount paid (in months) Period of Arrears (in months) (col.11-col.13) Preliminary status of Classification Final Classification Size Frequency Objective Criteria Qualitative Judgement Classif￾ication Status Basis for Classif￾ication 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Total Sl. No. Amount Cumulative interest suspense as of reference date Value of eligible collateral (to nearest amount) Base for Provision for Remarks Unclassified (UC) Classified Standard SMA Sub￾standard (SS) Doubtful (DF) Bad/Loss (B/L) UC (Standard) (If any) SMA Classified A/Cs Total SMA Col. (20-25) Sub￾standard (SS) Col. (21-26-28) Doubtful (DF) Col. (22-26-28) Bad/Loss (B/L) Col. (23-26-28) 1 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Total Note : Col. 9 = Installment Frequency in months Col. 13 = ( Col. 12 X Col.9) ÷ Col.8

Ref : BRPD Circular no. 07/2012 CL-5 RETURNS FOR CLASSIFICATION OF SHORT TERM AGRICULTURAL CREDIT AND MICRO CREDIT AS OF……………….. Page No. Bank Name: Branch Name : Stamp of Branch Serial No……… (As Provided by Bangladesh Bank) I. Short Term Agri. Credit II. Microcredit (Amount in Taka) Sl. No. Loan Identification No. and NID Date of sanction/last rescheduling DD/MM/YY Principal Amount/ Rescheduled Amount Due date DD/MM/YY Period of arrears (in months) (Ref. Date – Col.5) Balance Outstanding Interest suspense Value of eligible collateral (to nearest amount) Base for provision for Unclassified Classified Substandard (SS) Col. (8-12-14) Doubtful (DF) Col. (9-12-14) Bad/Loss (B/L) Col. (10-12-14) Sub￾standard (SS) Doubtful (DF) Bad/Loss (B/L) UC (if any) Classified A/Cs Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Total

CL-1 OBU SUMMARY OF LOAN CLASSIFICATION AND PROVISION AS OF……………….. Ref : BRPD Circular no. 07/2012 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) Classif ied 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% 1% 2% 1% SMA - 5% 5% 5% 5% 5% 5% 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%