BRPD Circular No. 32: General provision on loan against shares etc

website: www.bangladesh-bank.org www.bangladeshbank.org.bd Banking Regulation & Policy Department Bangladesh Bank Head Office Dhaka Kartick 12, 1417 BRPD Circular No. 32 Date: ----------------------- October 27, 2010 General Provision on loan against shares etc. Please refer to BRPD circular no. 05/2006 on Loan Classification and Provisioning. According to the circul ar banks ar e required t o maintain 1% general provision on unclassified loans/advances against C ontinuous, D emand and Ter m loans; 2% against Housing Finance (HF) and Loans for Professionals to set up business (LP) and 5% ag ainst other loans (other than HF & LP). It is to mention in this regard that banks are also require d to m aintain 1% genera l provision on unclassifie d amount of th e funded loa n disbursed t o stock dealer s enlisted with Stock E xchange, separate subsidiary company established by a bank company for dealing business in share brokerage and m erchant banking and any other company or institution or individual for dealing such business. It is m entionable in this context that bank loan/ bank financin g to abo ve mentioned deal ers/subsidiary companies/any other company or institution or i ndividual become vulnerable due to volatilit y of market prices of shares/debentures. Considering the investment risks in the capital market it has now been decided that banks sh all maintain 2% general provision instead of 1% against unclassif ied amount of any kind of funded loan disbursed to stock dealers enlisted w ith Stock Exchange, separate subsidiary com pany established by a bank co mpany for dealing business in share brokerage and merchant banking and an y other company or institution or individual for dealing such business. In this context, the existing Cl-1 format has been amended. Banks are advised to submit data in the revised Cl-1 format. This instruction shall come into force with immediate effect. Please acknowledge receipt. Yours sincerely sd/- (Md. Jahangir Alam) General Manager Phone: 7117825 Enclosure: Revised CL-1 format

CL-1 (Taka in thousand) Standard SMA SS DF B/L 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1 Continuous Loan (CL-2) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (CF) III) Loans to BHs/MBs/SDs against Shares etc IV) Other than SMEF, CF, BHs/ MBs,/SDs Sub-total of I, II, III & IV 2 Demand Loan (CL-3) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (CF) III) Loans to BHs/MBs/SDs against Shares etc. IV) Other than SMEF, CF, BHs/ MBs,/SDs Sub-total of I, II, III & IV 3 Term loan Upto 5 years (CL-4) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (Other than HF & LP) III) Housing Finance (HF) IV) Loans for professionals to set up business (LP) V) Loans to BHs/MBs/SDs against Shares etc VI) Others Sub-total of I, II, III, IV, V & VI 4 Term loan over 5 years (CL-5) I) Small & Medium Enterprise Financing (SMEF) II) Consumer Financing (Other than HF & LP) III) Housing Finance (HF) IV) Loans for professionals to set up business (LP) V) Loans to BHs/MBs/SDs against Shares etc VI) Others Sub-total of I, II, III, IV, V & VI 5 Short term Agri. Credit and Microcredit (CL-6) I) Short Term Agri. Credit II) Microcredit Sub-total of I & II Sub-total (1+2+3+4+5) Staff Loan Grand Total CHECK LIST CL-2 CL-5 CL-3 CL-6 CL-4 Standard 5% 5% 2% 2% 1% 2% 1% SMA - 5% 5% 5% 5% 5% 5% SS 5% 20% 20% 20% 20% 20% 20% DF 5% 50% 50% 50% 50% 50% 50% B/L 100% 100% 100% 100% 100% 100% 100% SMEF All other Credit Amount of Actual Provision (Taka in thousand) : Consumer financing NB: CF=CONSUMER FINANCE, HF=HOUSING FINANCE, LP=LOANS FOR PROFESSIONALS TO SET UP BUSINESS, SMA=SPECIAL MENTION ACCOUNT, SS=SUBSTANDARD, DF=DOUBTFUL, B/L=BAD/LOSS, BHs/ MBs,/SDs= LOANS TO BROKERAGE HOUSES/MERCHANT BANKS/STOCK DEALERS AGAISNT SHARES ETC. Particulars Ref: BRPD Circular No.-5/06,32/10 Loans to BHs/MBs/ SDs against Shares etc Short Term Agri. Credit Other than HF,LP HF LP BRANCH SUMMARY OF LOAN CLASSIFICATION AND PROVISION AS OF ---------- No. of Page Form No. No. of Page UC(standard) (if any) Interest suspense on SMA Classified A/Cs Total Balance outstanding BANK NAME BRANCH NAME : Stamp of Branch Serial No. (As provided by Bangladesh Bank) Total SMA SS DF Amount of provision required Base for provision B/L SL Categories of Loans No. UC Classified Unclassified(UC) Classified Form No. Rate of Provision :