DFIM Circular Letter No. 13: Rescheduling/restructuring of housing loan/investment

Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: DFIM Circular Letter No. 13 Managing Director / Chief Executive Officer All Finance Companies operating in Bangladesh.

Dear Sir,

Regarding Rescheduling/Restructuring of Housing Loan/Investment.

1. We draw your attention to DFIM Circular No. 10, dated: 4 September 2022.

2. According to the aforementioned circular, the maximum tenor for rescheduling/restructuring of any loan including housing loans is fixed at 6 (six) years. Consequently, under the current policy, if there is a need for long-term housing loan rescheduling or restructuring, the loan repayment period may in some cases be reduced from the existing remaining tenor of the loan.

3. In this context, it has been decided that to ensure that the actual repayment period of long-term housing loans does not decrease and the installment amount does not increase due to temporary cash flow problems due to reasons beyond control, the following tenor shall apply when the need for rescheduling or restructuring of housing loans arises:

Installment of Rescheduling or Restructuring	Maximum Tenor of Loan Fixed in Rescheduling or Restructuring	Maximum Age Limit of Individual Customer
1st Installment	Current Tenor of Loan + 30%	Ensure that the total loan is recovered between the maximum age of 70 years. The date of final installment payment shall never be after the customer reaches 70 years of age.
2nd Installment	Current Tenor of Loan + 20%
3rd Installment	Current Tenor of Loan + 10%

4. The following regulations shall apply in the case of rescheduling/restructuring of housing loans/investments:

(a) Construction loans shall not be rescheduled or restructured more than 3 (three) times in total. If the loan is not recovered even after rescheduling/restructuring a total of 3 (three) times, appropriate legal measures shall be taken for recovery of dues and necessary provisions shall be maintained.

(b) Rescheduling/restructuring shall be done in subsequent installments after recovering a minimum of 6 (six) monthly installments or an equivalent amount thereof.

(c) Sub-standard (sub-standard, doubtful, low/damaged) classified loans shall be rescheduled, and loans classified as Standard or SME shall be restructured. The principal of rescheduled/restructured loans shall be payable in monthly or quarterly installments.

(d) In the case of tenor extension, the source of income of the customer, cash flow during the extended period, etc., shall be examined, and the borrower's repayment capacity shall be verified.

(e) The proper use of the previous loan before rescheduling/restructuring of housing loans shall be verified, and it shall be ensured that the mortgage process of the proposed additional collateral in the main sanction letter is completed.

(f) The application for rescheduling/restructuring of housing loans shall be decided within a maximum of 2 (two) months of receipt, and no grace period shall be provided other than this. If the application is not acceptable, the customer shall be informed in writing.

Date: 20 Jyestha 1432 3 June 2025 Department of Financial Institutions and Markets Page 2/02

(g) There is no mandatory requirement for any down payment in the case of regular loan restructuring. In the case of loan rescheduling, mandatory down payment shall be collected at the following rates:

• In the case of the first installment of rescheduling: 2% of the total outstanding loan;
• In the case of the second installment of rescheduling: 3% of the total outstanding loan; and
• In the case of the third installment of rescheduling: 4% of the total outstanding loan. However, any amount paid as part of the installment of the loan/lease/investment shall not be shown as a down payment.

(h) In the case of rescheduling/restructuring of loans transferred to any finance company through acquisition (assignment) of rescheduled/restructured loans by any other finance company or bank, the sequence of restructuring/rescheduling by the previous institution shall apply. For this purpose, a declaration shall be collected from the customer during the evaluation of the rescheduling/restructuring proposal, and it shall be verified through verification.

5. Interest and Provisioning of Rescheduled/Restructured Housing Loans:

(a) Interest on rescheduled/restructured housing loans shall not be transferred to the income account except upon actual recovery. The same regulation shall apply to previously suspended interest in the case of rescheduling.

(b) If necessary provisions are not maintained against rescheduled/restructured housing loans, arrangements shall be made to maintain necessary provisions based on the previous classification of the rescheduling/restructuring.

(c) Along with rescheduling/restructuring of any loan account, the provisions/proportion of provisions previously maintained against such loans shall not be transferred to the income account or adjusted with provisions maintained against other loans. In subsequent periods, the previously maintained provisions/proportion of provisions shall be adjusted proportionately against the new repayment schedule upon collection of installments, under the heading 'Provisions No Longer Required' of Section 12(1)(a) of DFIM Circular No. 11, dated: 23 December 2009.

6. Under this policy, any application regarding rescheduling/restructuring of housing loans shall be decided by the Board of Directors of the finance companies based on the institution-customer relationship, following rules and regulations. In this regard, there is no need for approval/no-objection from Bangladesh Bank. Institutions shall prepare their own policies in the approval process of the Board of Directors regarding rescheduling/restructuring of housing loans/investments, the terms of which shall not be easier than the terms mentioned herein.

7. Loans distributed through fake/fraudulent means shall not be rescheduled/restructured under this policy.

8. In the case of housing loans distributed under the variable interest rate system, if there is a need to increase the installment amount due to an increase in market-based interest/profit rates, the loan repayment tenor or the number of payable installments may be increased while keeping the installment amount unchanged. Such an increase in the number of installments shall not be considered as loan restructuring. However, in such cases, the written application of the borrower shall be accepted, and evidence of the customer's consent shall be kept on record by informing the customer about the increase in total payable interest or profit due to the tenor extension.

9. In the case of reporting rescheduled/restructured loans, the instructions of Section 13 of DFIM Circular No. 10, dated: 4 September 2022, shall be followed as usual.

10. In the case of rescheduling/restructuring of all loans/leases/investments other than housing loans in the housing sector, the instructions of DFIM Circular No. 10, dated: 4 September 2022, shall apply.

11. These instructions are issued under the powers granted by Section 41(2)(d) of the Finance Companies Act, 2023, and shall come into force immediately.

Yours faithfully,

(Dr. Sayed Nazmul Islam) Additional Director Phone: 9530178.

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