Regulatory Alerts2022-12-21
Added
DFIM Circular Letter No. 27: Loan/lease/investment classification of NBFIs
Financial institutions must not classify time loans, leases, or investments as non-performing if at least 50% of the installments due between October and December 2022 are paid by December 31, 2022. The remaining unpaid installments must be repaid in equal monthly or quarterly installments within one year following the original loan's maturity, with no penalty interest or additional fees charged for this extended period. This directive applies to Islamic Shariah-based investments and extends benefits to accounts previously rescheduled under Circular No. 10/2022.
Department of Financial Institutions and Markets Bangladesh Bank Head Office Dhaka. Ref No: 18.00.0000.027.01.001.22-137 DFIM Circular Letter No. 27 Managing Directors/Chief Executive Officers All Financial Institutions operating in Bangladesh.
Dear Sir,
Re: Classification of Loan/Lease/Investment.
With reference to the above subject, it is informed that due to various uncontrollable reasons, the cash flow of small, large, and medium borrowers, both individuals and institutions, has been adversely affected, leading to the disruption of loan installment collections according to the existing repayment schedule. In this context, to maintain the momentum of ongoing economic activities by facilitating loan repayment for affected customers and to mitigate the negative impact on business and commerce, the following decision has been taken:
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For time loan/lease/investment accounts of financial institutions that remained unclassified until September 2022, if at least 50% of the installments payable during the period from October 2022 to December 2022 are paid by the last working day of December 2022, such time loan/lease accounts shall not be classified as non-performing.
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The remaining portion of the aforementioned unpaid installments shall be paid in equal installments (monthly/quarterly) within 01 (one) year after the expiry of the prescribed tenure of the existing loan. However, considering the remaining tenure of the loan-institution relationship along with the additional 01 (one) year period, installments may be rescheduled and collected according to a new schedule.
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This policy shall also apply to time investments based on Islamic Shariah.
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In case of failure to repay loans in accordance with the aforementioned instructions, the loans shall be classified in due course.
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Through this Circular Letter, no penalty interest or additional fee (however named) shall be charged for the additional period granted for the benefited time loans.
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This Circular Letter shall also apply to time loans/leases/investments shown as unclassified until September 2022 through rescheduling/restructuring under DFIM Circular No. 10/2022 or otherwise legally.
This order is issued under the power conferred by Section 18(c) of the Financial Institutions Act, 1993, and shall come into force immediately.
Yours faithfully,
(Md. Amir Uddin) Director (DFIM) Phone: 9530178
Date: 21 December 2022