BRPD Circular No. 07: Policy Support for Restructuring the Business and Financial Condition of Affected Borrowers

Page: 1/5 Bangladesh Bank Head Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: BRPD.CIR.07 Banking Regulation and Policy Department 16 September 2025 BRPD Circular No.-07 Date: ------------------ 01 Ashwin 1432 Managing Director / Chief Executive Officer All Scheduled Banks operating in Bangladesh Dear Sir,

In the context of providing policy support for restructuring the business and financial condition of affected borrowers,

Previously, during the period before the August 2024 policy changes, many borrower institutions creating investment and employment in the country faced difficulties in operating normal business activities and repaying loans or loan installments due to being outside regulatory control. Some of these borrowers faced non-commercial attitudes in obtaining banking and ancillary services related to loans, preventing them from operating normal business/production activities. Consequently, the loan accounts of affected institutions have been adversely classified, negatively impacting banks' loan distribution and recovery operations, which poses a risk to the overall financial structure of Bangladesh's economy and banking sector. In this regard, Bangladesh Bank has taken various initiatives to restructure affected borrower institutions, restore desired momentum in the banking sector, and bring dynamism to the country's economic activities. Continuing this series, it has been decided to provide policy support to ensure loan recovery by activating and making profitable the business and financial arrangements of potentially viable but affected borrower institutions through restructuring. The detailed process for obtaining such policy support is described below:

2. Eligibility for Policy Support: 2.1. Policy support as described in Section 3 of this circular will be provided to affected borrower institutions creating investment and employment, who are expected to be financially viable, for the following reasons: a) Affected institutions and active export-oriented industrial institutions that suffered due to various out-of-control and non-commercial attitudes in providing loans and related banking and ancillary services in the past (e.g., facing attitude-related harassment, not receiving promised utility connections/supplies, etc.). b) Affected institutions due to supply chain disruptions and unexpected exchange rate fluctuations of the Taka against foreign currency for various reasons.

2.2. Borrower institutions that have previously received any policy support such as loan rescheduling, restructuring, etc., will not be eligible for policy support in the context of loan rescheduling and restructuring. Such borrower institutions will receive priority.

2.3. In providing policy support to affected borrowers, the bank must verify the eligibility criteria described in Section 2, along with the borrower's potential loan repayment capacity for the proposed policy support period, through the bank's internal audit and risk management department. Furthermore, the bank may also verify this matter through listed audit institutions by Bangladesh Bank if necessary.

3. Nature of Policy Support: The following rules will be followed in providing policy support to genuinely affected borrowers for the reasons described in Section 2:

Page: 2/5 3.1. Special Rescheduling Benefits: a) Loans classified as D/U/I/K (D/U/I/K) as of June 30, 2025, may be rescheduled for a maximum of 10 (ten) years with a maximum 02-year grace period, based on the amount of the said loan and the bank-customer relationship. b) In considering the application for rescheduling, a minimum 2% down payment in cash must be collected from the borrower. Installments paid or part thereof paid before submitting the special loan rescheduling application will not be considered as a down payment. c) If the loan has been rescheduled three or more times previously, an additional 1% down payment over the rate mentioned in item 3.1(b) must be collected. d) For loans benefiting from this facility, the bank may determine a floating interest rate based on the bank-customer relationship (1% lower than the minimum interest rate prescribed for the relevant sector according to the Interest Rate Policy). e) Installments of specially rescheduled loans will be recoverable in monthly or quarterly equal installments based on the bank-customer relationship. However, interest accrued during the grace period may be recovered fully or partially based on the bank-customer relationship. f) Specially rescheduled loans benefiting from this facility must be classified as SMA (SMA) and appropriate general provision (General Provision) must be maintained accordingly. Furthermore, previously maintained specific provision (Specific Provision) against the rescheduled loan account cannot be transferred to the bank's income account except upon actual recovery. However, it may be transferred for the purpose of maintaining general provision. g) Interest and reserve interest kept against specially rescheduled loans benefiting from this facility, and interest charged after rescheduling, cannot be transferred to the bank's income account except upon actual recovery. h) If the borrower fails to pay 03 (three) monthly installments or 01 (one) quarterly installment according to the repayment schedule determined by the bank, the relevant loan account must be classified according to BRPD Circular No. 15/2024 regarding loan classification and provisioning. i) New loan facilities or increases in existing loan limits cannot be provided to the said borrower except upon providing an Irrevocable Letter of Credit (ILOC). However, before approving new loans or increasing loan limits, the customer's past transactions and overall position must be reviewed. j) Special rescheduling provided under this policy will not be included in the sequence of rescheduling under BRPD Circular No. 16/2022. k) In providing special rescheduling benefits, other instructions issued under BRPD Circular No. 16/2022 and its subsequent orders, except for the instructions mentioned in this circular, will be followed.

3.2. Policy Support in the Context of Foreign Currency Exchange Rate Losses: a) For UGENS loan documents (UGENs) established and/or disbursed between January-December, 2022 for importing raw materials for industrial institutions, the bank will calculate the total amount of losses due to unexpected exchange rate fluctuations of the Taka against foreign currency according to the instructions described in BRPD Circular Letter No. 50/2024. b) Repayment time limits may be provided for loans based on the bank-customer relationship according to the instructions mentioned in 2(g) of the said circular letter. Furthermore, other instructions of BRPD Circular Letter No. 50/2024 will remain unchanged.

Page: 3/5 3.3. Special Restructuring Benefits: a) Unclassified medium-term loans (including previously rescheduled loans) as of June 30, 2025, may be restructured by determining an additional maximum 02 (two) years tenor beyond the tenor described in Section 6(1) of BRPD Circular No. 16/2022, based on the amount of the said loan and the bank-customer relationship. b) Monthly or quarterly equal installments must be determined based on the bank-customer relationship. c) In providing special restructuring benefits, other instructions issued under BRPD Circular No. 16/2022 and its subsequent orders, except for the instructions mentioned in this circular, will be followed.

3.4. Special Exit Benefits: a) In providing special exit benefits, an additional 01 (one) year time beyond the tenor described in the said circular may be provided after collecting a down payment at the rate described in BRPD Circular No. 13/2024. b) In providing special exit for regular loans, interest charged during the exit period may be recovered fully or partially based on the bank-customer relationship. c) In providing exit benefits, other instructions issued under BRPD Circular No. 13/2024 and its subsequent orders, except for the instructions mentioned in this circular, will be followed.

4. Application Process and Ineligibility: a) To obtain policy support under this circular, the relevant bank must apply by December 31, 2025. b) The bank must decide within 06 (six) months from the date of receiving the application. If the down payment required for policy support is provided by check or other instrument, the said 06 (six) months will be calculated from the date of encashment. However, policy support applications cannot be processed before encashment, as the down payment means encashment by the bank. c) The bank does not need to obtain no-objection from Bangladesh Bank in providing policy support. However, approval must be obtained from the bank's Board of Directors. d) In providing policy support against loans taken from multiple banks, the largest lending bank or any bank with the consent of all lenders will take initiative and convene a meeting to make necessary decisions. In this case, other lending banks will provide necessary cooperation to the lead bank. e) If the bank cannot make a decision on providing policy support to borrowers with loan positions of 300 (three hundred) crore Taka or more, it must send an application to the "Policy Support Selection Committee for Business and Financial Restructuring" along with the minutes of the internal bank meeting/Board of Directors' approval. f) Benefits described in this circular cannot be provided in the case of loans created through forgery/fraud or other types of deception/irregularities. g) Borrowers declared as willful defaulters by the bank will not be eligible for the benefits described in this circular.

5. Other Instructions: a) The tenor for rescheduling/restructuring/exit must be determined by appropriately considering the amount of loss of genuinely affected borrowers and the institution's potential to recover. In determining the tenor, the memo presented at the bank's Board of Directors meeting and the minutes of the meeting must clearly mention the specific reasons. b) Within 90 (ninety) days from the date of providing benefits under this circular to borrowers, the bank and customer must take necessary measures to suspend ongoing cases through a memorandum of understanding. If the customer breaches any condition of the benefits provided subsequently, all benefits provided in their favor will be considered void, and the bank must take necessary legal measures for loan recovery.

Page: 4/5 c) Loans benefiting from special rescheduling (including policy support provided in the context of exchange rate losses), restructuring, and exit benefits under this circular must be reported in CIB respectively as "Rescheduled D/U/K", "Rescheduled D/U/E", and "Rescheduled U/E" until fully repaid. d) The relevant loans must be reported in CL-4, and in column 6 of CL-4, loans benefiting from special rescheduling (including policy support provided in the context of exchange rate losses), restructuring, and exit benefits must be mentioned respectively as "Rescheduled D/U/K", "Rescheduled D/U/E", and "Rescheduled U/E" until fully repaid. e) Information regarding policy support provided by the bank under this circular must be submitted to the Banking Regulation and Policy Department (Division-1) in the form of a report (according to Annexure-'A') on a quarterly basis by the 15 (fifteenth) of the following month. Related documents and updated reports must be kept for presentation to the Bangladesh Bank inspection team upon request.

6. Directors of any bank-company and their family members, or borrowers taken by institutions related to the director's interest, in providing policy support under this policy, must obtain prior approval from Bangladesh Bank and ensure compliance with regulations regarding interest or profit waiver described in Section 28 of the Bank Company Act, 1991.

7. If a director of any borrower institution is accused under Section 17 of the Bank Company Act, 1991 as a director of any bank-company, Section 17(5) of the said Act will be applicable in the context of loan recovery by the relevant bank.

8. Islamic Shariah-based banks may provide policy support against their investments following the above policy.

9. These instructions are issued under the powers conferred by Section 49(1)(c) of the Bank Company Act, 1991, and will take effect immediately.

Yours faithfully, (Md. Bazlur Rahman Sarkar) Director (BRPD) Phone: 9530252

Page: 5/5 Annexure-'A' Name of the Bank: Details of Policy Support based on ----------------- Date (a) Information related to policy support provided by the bank: (In Crore Taka) Total Policy Support Received Total Amount of Specially Rescheduled Loans Amount of Specially Rescheduled Loans per Quarter Amount of Policy Support Provided in Context of Exchange Rate Losses Amount of Policy Support Provided in Context of Exchange Rate Losses per Quarter Total Amount of Specially Restructured Loans Amount of Specially Restructured Loans per Quarter Total Amount of Specially Exit Benefited Loans Amount of Specially Exit Benefited Loans per Quarter Remarks (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

(b) Information related to specially rescheduled, exit benefited, and policy support provided in context of exchange rate losses based on borrower: (In Crore Taka) Serial No. Name of Borrower Individual/Institution Borrower Institution's NID/Registration No. 1 and Applicable Case No. 2 Total Amount of Loan Position Total Amount of Classified Loans Nature of Policy Support (Rescheduling/Exit/Policy Support in Context of Exchange Rate Losses) Amount of Rescheduled or Exit Loan Position or Policy Support Provided in Context of Exchange Rate Losses Tenor Provided Nature of Approved Loan (Running, Call, Medium-term, etc.) Amount of Interest Provided as Down Payment (If Applicable) Remarks Amount Percentage (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) 1 2 1NID - National ID, 2Reg - Registration No.

(c) Information related to specially restructured loans based on borrower: (In Crore Taka) Serial No. Name of Borrower Individual/Institution Borrower Institution's National ID/Registration No. (NID) Total Amount of Loan Position Remaining Tenor of Existing Loan Amount of Restructured Loan Position Tenor of Restructured Loan Amount of Interest Collected as Down Payment (If Any) Remarks Amount Percentage (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) 1 2 Signature (Name and Designation) Name and Designation of Responsible Officer: Office Phone No.: Mobile Phone No.: E-mail: