BRPD Circular No. 13: Loan Classification and Provisioning

website: www.bb.org.bd
Banking Regulation & Policy Department
Bangladesh Bank
Head Office
Dhaka-1000
18 October 2018
BRPD Circular No. 13 Date : ------------------------ 03 Kartik 1425 Chief Executives All Scheduled Banks in Bangladesh Dear Sir, Loan Classification and Provisioning Please refer to BRPD Circular No. 14, dated 23 September 2012 on the captioned subject.
02. As per the referred circular, banks are required to maintain 1% General Provision against
the guarantees they issue for their clients since guarantee is an off-balance sheet exposure. However, through issuance of BRPD Circular No. 07, dated 21 June 2018, banks were given exemption from maintaining any provision for those guarantees against which the counter-guarantees are issued only by the Multilateral Development Banks (MDBs)/International Banks having a BB rating grade '1' equivalent outlined in the Guidelines on Risk Based Capital Adequacy (Revised Regulatory Capital Framework for banks in line with Basel III). Now the provisioning requirement for the bank guarantees has been modified in accordance with their respective counter-guarantees in the following way:
BB rating grade equivalence of the
Bank/financial institution/organization providing the counter-guarantee Provision requirement (% of the exposure amount) 1 NIL 2 0.50 3 or 4 0.75 Others 1.00
03. Other instructions of the abovementioned BRPD circulars will deem to be unaltered.
This circular will come into force with immediate effect.
Yours sincerely,
(Abu Farah Md. Nasser)
General Manager
Phone: 9530252