BRPD Circular No. 13: Loan Classification

Ref: BRPD Circular No. 13 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka. 15 June 2020 BRPD Circular No. 13 Date: ------------------ 01 Asharh 1427 Managing Director / Chief Executive All Scheduled Banks operating in Bangladesh. Dear Sir, Context of Loan Classification. Reference is drawn to your attention to BRPD Circular No. 04 issued on 19 March 2020 on the subject mentioned above.

2. Considering the negative impact of the coronavirus in the country, instructions were issued through the aforementioned circular regarding loan classification that loans which were classified as such on 01 January 2020 would not be classified worse than that during the period up to 30 June 2020. However, if the classification of any loan improves, it may be classified according to the relevant rules.

3. Due to COVID-19, most sectors of the country have been affected and there is a fear that its negative impact will be long-lasting. Many industries, services, and business sectors are unable to operate their normal programs. Considering the changing circumstances and with the aim of keeping the negative impact of COVID-19 on the business of loan/investment recipients within tolerable limits, the following instructions are to be followed in determining the maturity/repayment schedule and classification of loans/investments:

a) Loans/investments which were classified as such on 01 January 2020 will not be classified worse than that during the period up to 30 September 2020. However, if the classification of any loan/investment improves, it may be classified according to the relevant rules.

b) To comply with the instructions mentioned in clause 3(a), installments due against existing term loans/investments (including short-term agricultural loans and micro-credits) on 01 January 2020 will be considered as deferred from 01 January 2020 to 30 September 2020. In this regard, the amount and number of installments for the relevant loans/investments will be re-determined from October/2020. During the re-determination period, the number of installments will increase by the same number as the installments that were due from January/2020 to September/2020. Even if no installment is paid during the period from 01 January 2020 to 30 September 2020, the relevant term loan/investment recipient will not be considered a defaulter for such installments.

c) The maturity/adjustment date of existing current and demand loans/investments on 01 January 2020 and demand nature loans/investments created during the period from that date to 31 May 2020 will be increased from the current maturity to 9 (nine) months or 31 December 2020 (whichever is earlier).

d) The existing policy regarding the calculation of interest/profit on loans/investments during the period mentioned in clauses 3(b) and 3(c) will remain in force. However, no penalty interest or extra charges (however named) will be imposed on such loans/investments during the said period.

e) If a customer does not feel the need to avail the mentioned facility, the loan/investment may be adjusted according to the pre-determined repayment schedule or based on the bank-customer relationship.

4. These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991. These instructions will come into force immediately.

Yours faithfully, Md. Nazrul Islam General Manager Phone: 9530252