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The central bank said in a statement that in view of the negative impact of Covid-19 on the Bangladeshi economy, it was ordered that the loan could not be classified negatively until December 31, as it happened in January. However, if the class quality of a loan improves, it can be classified according to the appropriate rules.
Bangladesh Bank officials say a new decision has been made to transfer interest rates on interest-bearing loans to the bank’s income sector and insure securities against loans to strengthen the financial base and increase banks’ ability to take risks in the future.
Consequently, loans that are in unclassified status due to the added benefit of installment amortization will need to be decided after reviewing the potential risk of recovery if interest charged from January to December is transferred to the income sector without collecting cash.
Bangladesh Bank says that in case of transfer of interest charged against loans of Tk 10 crore and more (based on borrowers) to income sector, Managing Authority review (citing rationality) must be approved by Board of Directors of the bank together with the recommendation of the Executive Committee.
