BRPD Circular No. 15: Loan Rescheduling of Leather Sector for the Purpose of Purchasing Raw Hides

BRPD Circular No. 15 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka. Asharh 21, 1427 BRPD Circular No. 15 Date: ----------------- July 05, 2020 Managing Director / Chief Executive Officer All Scheduled Banks Operating in Bangladesh

Dear Sir,

Regarding the rescheduling of loans/investments for leather traders for the purchase of raw hides of sacrificed animals during the upcoming Eid-ul-Adha festival.

The leather industry is an export-oriented industry based on domestic raw materials. It is a promising sector in terms of national growth, employment, foreign exchange earnings, and value addition. Almost all of the raw materials used in the leather industry throughout the year come from the hides of animals sacrificed during the annual holy Eid-ul-Adha festival. If the supply of necessary raw materials can be ensured to raw hide traders at this time, valuable raw materials can be preserved on one hand, and the rural population can be economically benefited through the sale of sacrificed animal hides on the other.

2. In this regard, it is mentioned that due to various reasons, existing loans/investments in the leather sector are not being repaid regularly, causing some loans/investments to become classified as non-performing. As a result, in many cases, it is not possible to maintain the normal flow of loans/investments in this sector. In view of the prevailing situation, with the aim of conducting the purchase, sale, and preservation program of raw hides of sacrificed animals during the upcoming Eid-ul-Adha festival in a proper and orderly manner, and to keep the flow of funds active among genuine leather traders for the purchase of raw hides, the following decisions have been taken regarding the rescheduling of their irregular loans/investments:

(a) Banks may take their own decisions based on the bank-customer relationship to reschedule loans/investments, subject to the collection of a minimum 2% down payment in cash based on the loan/investment position as of June 30, 2020. In this regard, installments already paid in previous related loan/investment accounts will not be considered as down payment.

(b) Rescheduling facilities under this circular will be provided if the loan/investment account is classified due to reasons beyond the control of the loan/investment recipient, and the business establishment is operational/ongoing.

(c) Case-to-case basis, call and running loans/investments can be rescheduled for a maximum period of 6 (six) years, and term loans/investments for a maximum period of 8 (eight) years, including a 1 (one) year grace period.

(d) The criteria for accepting compromised amounts can be relaxed in the distribution of new loans/investments for the purpose of purchasing raw hides of sacrificed animals.

(e) Borrowers receiving loans/investments under this circular must apply to their respective banks for loan/investment rescheduling by July 30, 2020.

3. These instructions are issued under the powers granted under Section 45 of the Bank Company Act, 1991.

4. These instructions will take immediate effect.

Yours faithfully,

(Md. Nazrul Islam) General Manager Phone: 9530252