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Under the incentive package, clients can apply for a loan without complying with the requirements of the internal credit risk rating policy (ICRR) formulated by Bangladesh Bank. This facilitated the debt process.
The decision was made due to the coronavirus, which limited official activities and disrupted ICRR activities and disrupted the provision of necessary documents to recipients.
The Bank Policy and Banking Regulation Department of the Bank of Bangladesh issued a notice on the matter on Sunday.
The circular read: “In this catastrophic situation, banks will be able to make loans even if the ICRR has not been completed to provide incentive package loan facilities to accelerate their activities in the industry and services sector.” However, each bank will select clients based on the banker-client relationship after analyzing the loan risk under their existing policy.
Governor Fazle Kabir launched the new credit risk measurement policy in the auditorium of the Bangladesh Bank Management Institute (BIBM) on January 17, 2019 in the context of default on loans in the country’s banks. The policy, called the Internal Credit Risk Rating (ICRR), stipulates the evaluation of both the amount and the quality of the loan.
In accordance with ICRR policy, banks will classify a customer into four categories: Excellent, Good, Marginal, and Unacceptable. If a customer gets an ‘excellent’ rating, the bank may grant him a loan. Even if you get a “good” rating, the bank can still give you a loan. The bank must be careful when renewing old loans or making new loans to “marginal” rated clients. Under no circumstances will banks be able to make new loans to those with an “unacceptable” rating, unless the previous loan is repaid in cash or the loan is covered by a guarantee.
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