Dhaka, Bangladesh (BBN)- The loan, classified as doubtful and bad/loss will be treated as defaulted loan and the borrowers will not be eligible for fresh financing from any banks.
“If any loan or part of it or accrued interest thereon to any person/organization of his/its own or related concern remains ”overdue” for more than 06(six) months, the borrower availing of such loan facility will be treated as defaulted borrower as per section 5(GaGa) of the Banking Companies Act, 1991,” the central bank has said in a circular clarifying definition of loan defaulters.
“The central bank has issued the circular to clarify the definition of defaulted borrower,” a senior official of the Bangladesh Bank (BB) said, adding that the loan, classified as substandard, form now on, will not be treated as defaulted borrower.
The loan, classified as substandard, was earlier treated as defaulted loan, the BB official added.
Any loan will be classified as ‘substandard’ if it is due/overdue for three months or beyond but less than six months, according to the new provisions, announced by the central bank on June 14 last.
“It will be ‘doubtful’ if it is due/overdue for six months or beyond but less than nine months while it will be ‘bad/loss’ if it is due/overdue for nine months or beyond,” it noted.
The central bank earlier tightened its loan classification, provisioning and rescheduling policies aiming to ensure stability in the country’s banking sector.
“The BB has also redefined overdue loan with a view to determining defaulted borrower for the purpose of section 5(GaGa) of the Banking Companies Act, 1991,” another central banker said.
Under the redefinition, any loan, if not repaid/renewed within the fixed time limit for repayment will be treated as ”overdue” from the following day of its expiry date.
Any demand loan if not repaid within the fixed time limit for repayment or after the demand by the bank will be treated as ”overdue” from the following day of the expiry date or demand date.
In case of any instalment(s) or part of instalment(s) of a fixed term loan is not repaid within the expiry date or due date, the amount of unpaid instalment(s) as well as the loan will be treated as ”overdue” from the following day of the expiry date or due date.
“The short-term agricultural loan or micro-credit, not repaid within the fixed time limit for repayment, will be considered ”overdue” after 06(six) months of the expiry date,” it said.
BBN/SSR/AD-20July12-8:07 pm (BST)
