BRPD Circular No. 13: Regarding Loan Rescheduling of Cold Storage Industry

Bangladesh Bank Chief Executive Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: BRPD/Regulatory Policy & Policy Department 29 Asharh 1430 BRPD Circular No.- 13 Date: ---------------- 13 July 2023 Managing Directors / Chief Executive Officers All Scheduled Banks operating in Bangladesh Dear Sir, Regarding providing special facilities for loan rescheduling of agricultural-based cold storage industry.

Bangladesh is an agriculture-based country. Due to the lack of necessary facilities for crop preservation, most small and medium farmers in this country are forced to sell their produced crops at relatively lower prices during the harvest season. Even if the market price of the said crops increases later, the initial farmers are deprived of the expected price. In addition, a huge amount of crops is lost every year due to lack of preservation. In view of the immense importance of cold storage in preserving perishable agricultural food items, banks may reschedule existing projects and ongoing loan/investment accounts in the agricultural-based cold storage industry on the basis of banker-customer relationship.

The following policies shall be followed for rescheduling:

a) Separate two accounts shall be created by separating the interest and principal of the loan accounts as of June 30, 2023; b) The balance for interest shall be transferred to a non-interest bearing account, and the bank may charge interest on the principal amount according to prevailing rules; c) Rescheduling facilities may be provided for a maximum of 10 years, including a 1-year grace period, for the said loan accounts; d) Even if the loans are rescheduled, the provisions kept against the said loans shall be maintained. The said provisions shall not be transferred to the income account except upon actual recovery; e) Principal repayment shall be made first after the completion of the grace period. Thereafter, interest kept as a non-interest account shall be recovered. The said principal and interest shall be recoverable within the remaining 9 years. However, if any customer wishes, they may pay the outstanding amount for principal and interest even during the grace period; f) Loans in this sector shall be recoverable in quarterly installments; g) In providing this facility, down payment shall be made in accordance with the relevant instructions contained in the existing BRPD Circular No.-16/2022 regarding loan rescheduling and restructuring; h) Subject to compliance with the instructions contained in BRPD Circular No.-06/2022 and BRPD Circular Letter No.-18/2022, the authorized bank may take a decision on its own consideration regarding the provision of interest waiver facilities in favor of the said institutions; i) Loans that are again identified as Non-Performing Accounts (NPA) even after availing restructuring/rescheduling/interest waiver facilities under various policies previously declared for the cold storage sector, such loans shall also be newly rescheduled under the purview of this circular; j) The facilities mentioned in this circular shall not be applicable in the case of loans created through fraud; k) If there is any default in the recovery of principal and interest within the stipulated time, loan classification and provisioning shall be done according to regulations, and the bank shall take measures for loan recovery according to the law; l) Customers wishing to avail of the rescheduling facility under this circular shall apply to the authorized bank within 90 days of the issuance of the circular, after depositing cash down payment; m) The bank shall decide the customer's application within 60 days from the date of receipt of the borrower's application; n) Interest kept as a suspended interest account against the rescheduled loan account under this circular shall not be transferred to the income account except upon actual recovery; o) Banks operating on the basis of Islamic Shariah may, while following the above policies, take measures for recovery through rescheduling of their related investment accounts; and p) Pending cases on a solvency basis may be decided while availing facilities under this circular. If any customer violates any condition of the said facilities later, all facilities granted regarding the rescheduling shall be considered cancelled, and the suspended case against the customer may be revived.

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

Yours faithfully, (Mohammad Shahriar Siddique) Director (BRPD) Phone: 9530252