BRPD Circular No. 18: Regarding Loan Adjustment of Government Identified Sick/Closed Industries (Non-Textile Sector)

Bangladesh Bank Chief Executive Office Motijheel, Dhaka-1000 Bangladesh. Ref No: BRPD-Reg-Policy-08 Banking Regulation and Policy Department 09 Kartik, 1429 BRPD Circular No. - 18 Date: ------------------- 25 October, 2022 Managing Director / Chief Executive Officer All Scheduled Banks Operating in Bangladesh

Dear Sir,

Regarding the adjustment of loan accounts with a principal amount exceeding 50 (Fifty) Lakh Taka among industrial establishments in the non-textile sector (excluding garments and textile sector) identified and listed by the Ministry of Industries, and rendered sick due to reasons beyond the entrepreneur's control.

To resolve outstanding loan accounts with a principal amount exceeding 50 (Fifty) Lakh Taka among industrial establishments in the non-textile sector (excluding garments and textile sector) identified and recommended by the Ministry of Industries and rendered sick due to reasons beyond the entrepreneur's control (in accordance with the list attached with the Memoranda issued by the Ministry of Industries, Nationalization and Law-1 Branch on 13/01/2011, 16/04/2012, and 01/11/2012), the following exit policy shall be followed:

(a) Loan accounts shall be adjusted on an installment basis within a maximum period of 3 (Three) years from the date of providing the exit facility by the bank. However, if there is a need to adjust any loan by selling immovable property, the bank may provide the customer with the opportunity to repay the loan in a lump sum within the said 3 (Three) years. In both cases, if the loan is not adjusted within the time fixed by the bank, this facility shall be considered cancelled;

(b) Under the said exit facility, regardless of whether any type of payment schedule is provided on an installment or lump-sum basis, the relevant loan account shall be shown as a substandard account until the full loan adjustment is not completed;

(c) This circular's exit facility shall be provided after collecting cash in the form of interest equivalent to at least 2.5% of the existing principal loan (Principal Loan). It is noted that the interest collected for the down payment shall be adjusted with the waiver of interest-bearing debt;

(d) Subject to compliance with the instructions in BRPD Circular No.-06, Date: 21/04/2022 and BRPD Circular Letter No.-18, Date: 24/05/2022, the bank may take a decision based on its own consideration regarding the provision of interest waiver facilities in favor of the said sick industrial establishments;

(e) The bank may charge interest on the subsequent loan position (if any) after interest waiver at the maximum Cost of Fund rate;

(f) Within 90 (Ninety) days from the date of issuance of this policy, the customer shall provide a minimum of 2.5% interest in cash for the down payment and apply to the relevant bank. Applications regarding this shall not be accepted if the fixed time is exceeded;

(g) Under the said policy, the bank shall decide on the relevant/verified matters in the customer's application within 45 (Forty-Five) days from the date of receipt of the borrower's application;

(h) If the bank, customer, and buyer are interested, the loan can be adjusted through the sale of encumbered property against the said loan via a tripartite agreement; and

(i) Within 90 (Ninety) days from the date of providing this facility by the bank, the bank and customer shall take necessary legal steps to suspend the proceedings of ongoing cases through settlement. However, if any condition of the provided facility is violated, all facilities granted in favor of the customer shall be considered cancelled, and the suspended case against the customer shall 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,

(Maksuda Begum) Director (BRPD) Phone: 9530252