BRPD Circular No. 12: Transfer of Interest/Profit to Non-Interest Bearing Blocked Account During April 1, 2020 to May 31, 2020 Considering Business Situation Due to Corona Virus (COVID-19)

BRPD Circular No. 12
Banking Regulation and Policy Department
Bangladesh Bank
Head Office
Dhaka.
10 June 2020

Managing Director / Chief Executive Officer
All Scheduled Banks operating in Bangladesh.

Dear Sir,

Subject: Regarding the transfer of interest/profit imposed on bank loans/investments to a non-interest bearing blocked account considering the business situation created due to the outbreak of Novel Coronavirus (COVID-19).

Reference is drawn to your attention regarding BRPD Circular No. 11 issued on 03 May 2020 and BRPD Circular Letter No. 23 issued on 04 May 2020 on the subject cited above.

2. In view of the situation created due to the Novel Coronavirus, instructions were given through the aforementioned circulars to transfer the interest/profit imposed during the period from 01 April 2020 to 31 May 2020 on customer-wise loan/investment positions as of 31 March 2020 to a non-interest bearing blocked account. Furthermore, it was instructed that until further notice, the interest/profit transferred to the blocked account cannot be collected from the borrower of the respective loan/investment, nor can such interest/profit be transferred to the bank's income head.

3. Now, following the aforementioned instructions, you are hereby instructed to follow the policies mentioned below regarding the transfer of interest/profit kept in a non-interest bearing blocked account to the bank's income head and collection:

(a) Except for the loans/investments mentioned in paragraph 3(c) of this circular, interest/profit must be waived at the following rates on all other unclassified loans/investments based on customer-wise position as of 31 March 2020:

Customer-wise Loan/Investment Position (As of 31 March 2020)	Amount/Rate of Waiver (For April and May 2020)
Up to 1.00 (One) Lakh Taka	Full interest waived (According to BRPD Circular No. 03/2020, interest/profit rate on unclassified loans excluding Credit Cards is max 9%)
More than 1.00 (One) Lakh Taka but up to 10.00 (Ten) Lakh Taka	Annual rate of 2%.
More than 10.00 (Ten) Lakh Taka	Annual rate of 1%, however, maximum BDT 12.00 (Twelve) Lakh Taka per customer.

(b) The waived interest/profit will be received by banks as subsidy from the Government. However, regarding the entitlement of interest/profit subsidy, it must be ensured that the interest/profit rate on all unclassified loans/investments excluding Credit Cards is not more than 9% from 01 April 2020, in accordance with the instructions of BRPD Circular No. 03/2020.

(c) Interest/profit imposed on all types of unclassified loans/investments during April and May 2020 can be transferred to the income head according to existing policies.

(d) Loans/Investments where cash flow has been arranged or which have reached maturity and are being collected on a pro-rata basis shall be considered.

(e) For ongoing loans/investments, banks shall adjust the interest/profit against the principal amount.

(f) For April and May 2020, interest/profit shall be calculated separately.

(g) Any loan/investment where repayment/adjustment is made under Paragraph 3(a) shall be treated accordingly.

(h) Managing Directors/Chief Executives of foreign banks operating in Bangladesh shall inform the Banking Regulation and Policy Department by 15 July 2020 regarding the total amount of interest/profit entitled as subsidy after verifying the details provided by their respective branches.

(i) The concerned bank shall ensure proper implementation of the waiver measures.

(j) Future periodic reviews shall be conducted appropriately.

(k) Loans/Investments granted in foreign currency under Paragraph 3(c) shall be handled according to existing policies. These instructions shall be implemented immediately.

(l) Under Section 45 of the Bank Company Act, 1991, the remaining waived interest/profit shall be collected on a pro-rata basis. However, for those loans where installment arrangements exist, the remaining interest/profit shall be adjusted. For collection purposes, coordination with Accounting Standards is required. On June 30, 2020, within one month, the interest/profit accounts (Annex-K) shall be submitted to Bangladesh Bank. Banks shall verify the interest/profit subsidy amount through their Dhaka office. Bangladesh Bank shall confirm the subsidy amount. Credit Cards and Offshore Unit loans/investments are excluded from this instruction. This instruction is issued for the period of April and May 2021. If any interest/profit has already been approved and transferred, it shall be adjusted. The remaining interest/profit shall be kept in a non-interest bearing blocked account. Coordination shall be maintained. If any discrepancy or error is found in the information stated in the application, we shall be responsible. After confirmation by Bangladesh Bank regarding the interest/profit subsidy amount, customer-wise interest/profit subsidy shall be paid.

(m) Application Form

Banking Regulation and Policy Department
Shilpo Bhaban, Motijheel, Dhaka.

Dear Sir,

Subject: Regarding payment of subsidy for interest/profit for April and May 2020 under BRPD Circular No. 12/2020.

Reference is drawn to your attention regarding BRPD Circular No. 12 issued on 10 June 2020 on the subject cited above, stating that according to the policies mentioned in the said circular, the total amount of customer-wise waivable interest/profit for April and May 2020 on loans/investments based on the position as of 31 March 2020 of this bank has been determined as -----------/- (in words ----------- ) Taka. The relevant information is provided below for your information and necessary action:

(In Taka)

Customer-wise Loan/Investment Position (As of 31 March 2020)	Information related to Loans/Investments (As of 31 March 2020)	Information related to Waiver of Interest/Profit for April and May 2020
	Number of Borrowers	Amount of Loan/Investment	Total Interest/Profit	Waiver Rate	Amount of Waived Interest/Profit
k) Up to 1.00 (One) Lakh Taka
kh) More than 1.00 (One) Lakh Taka but up to 10.00 (Ten) Lakh Taka
g) Above 10.00 (Ten) Lakh Taka
gh) Sub-total (k+kh+g+ ---)
ng) Loans/Investments against Credit Cards
ch) Loans/Investments under Offshore Units
chh) Loans granted in Foreign Currency from ED Branches
j) Sub-total (gh+ng+ch+chh)
jh) Classified Loans/Investments Amount
nj) Total Loans/Investments (j+jh)*

• The amount of Total Loans/Investments must necessarily match the Statement of Affairs and CL description as of 31 March 2020.

It is certified that this bank has been implementing an interest/profit rate of not more than 9% on loans/investments from 01 April 2020 in accordance with BRPD Circular No. 03/2020, and the aforementioned interest/profit calculation has considered an interest/profit rate of not more than 9% on loans/investments. It is further certified that all information including the calculation of waivable interest/profit mentioned in the application is correct, and if any inconsistency or error is found in the mentioned information in the future, we shall be responsible. After confirmation by Bangladesh Bank regarding the interest/profit subsidy amount, customer-wise interest/profit subsidy shall be paid.

Now, according to the policies mentioned in the circular, a total of -------- (in words ------- ) Taka is requested from you as subsidy for the determined waivable interest/profit. Yours faithfully,

Signature:
Name:
Designation: Managing Director / Chief Executive / Head of Bangladesh Operations for Foreign Banks Phone No:

For any communication regarding calculation matters:
Name of Responsible Officer:
Designation: ---------- Office Phone No: -----, Mobile Phone No: ---------, E-mail: