BRPD Circular No. 14: Support for Tanneries Relocated or Ordered to Relocate to the Modern Leather Industrial City in Savar

BRPD Circular No. 14 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka. November 02, 2014 BRPD Circular No.-14 Date: ------------------ Katirke 18, 1421 Managing Director / Chief Executive All Scheduled Banks operating in Bangladesh. Dear Sir, Regarding the provision of facilities to tanneries relocated/under order of relocation to the Leather Industrial City of Savar. In accordance with the decision taken by the government, various facilities have been announced through the letter of this office dated 13/05/2008, No. BRPD(FI)260/13/2008-114-153, to resolve banking-related issues arising from the relocation of tannery industries from Dhaka city to Savar. The current government has taken special initiatives to expedite the work of relocating tannery industries to Savar. It is necessary to resolve quickly the banking loan-related issues that remain unresolved for those tanneries that have been relocated to Savar. Therefore, the following policies/methods shall be followed for those tanneries that relocate to the Leather Industrial City of Savar, Dhaka, and continue their business:

1. Moratorium Facility for Irregular Loans of Tanneries Relocated/Under Order of Relocation to the Leather Industrial City of Savar: - A moratorium facility, repayment schedule, and flexible repayment plan can be provided for relocation. A moratorium facility of 01 (one) year and a maximum repayment period of 08 (eight) years shall be considered for loans relocated under the Moratorium Facility.

2. Interest on loans relocated under the Moratorium Facility shall be recoverable at 10 (ten) percent or the BBSR rate, whichever is lower.

3. In cases where loans are relocated under the Moratorium Facility, unapplied interest, suspended interest, interest kept in suspense (OBI/Non-accrual) and penal interest may be waived (fully or partially). In this regard, the principal loan and litigation costs shall not be waived.

4. In the case of rescheduling of loans and obtaining new loans for tanneries engaged in export trade, the relaxation of the existing down payment requirement may be considered. In this regard, the consent of Bangladesh Bank may be obtained on a case-to-case basis if necessary.

5. Loans relocated/rescheduled as business loans can be adjusted from export bills. If installment repayment of the loan is not possible from export bills, the borrower shall repay from their own sources.

6. If loan recovery is not made within the stipulated time, the existing rules of loan classification and provisioning shall apply, and the bank shall ensure loan recovery under its existing rules.

7. In the case of providing new loans, if there is a deficiency in collateral, the customer shall provide new (fresh) collateral. Furthermore, if the tannery industries provide equivalent additional collateral against the existing mortgaged property, the mortgaged property may be released.

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8. Cases where tanneries are involved in litigation may be resolved on a solvency basis.
9. This facility may also be considered applicable for those loan accounts of relocated/under order of relocation tanneries that have already been rescheduled.
10. The borrower must apply to the concerned bank within 06 (six) months of the issuance of the circular, along with relevant documents and proof, for the relocation/relocation program of the tannery factory to the Leather Industrial City of Savar. These facilities shall be considered applicable subject to the satisfaction of the concerned bank regarding the progress of the tannery factory relocation/relocation program. This circular shall take effect immediately. Yours faithfully, (Chowdhury Md. Firoz Bin Alam) General Manager Phone: 9530252.