MD can give a loan of 10 crore!

Loans below Tk 5 to 10 crore will now be allowed only with the permission of the bank’s CEO or managing director. The Bank of Bangladesh issued a circular on the matter from the “Department of Banking Policy and Regulation” on Thursday (10 December) and sent it to all registered banks operating in the country.

The circular said that in case of profit transfer imposed on the balance sheet (based on the borrower) against the balance of Rs 5 crore or more but below Rs 10 crore, it must be approved by the CEO or managing director of the bank with the recommendation of the head of the branch. In case of transfer of profits imposed against loans or investments of Rs. 10 crore and more (based on borrowers) to the Board of Accounts, approval of the Board of Directors together with the recommendation of the Management Authority (with rationality) and recommendation of the Audit Committee.

In case of transfer of interest or profit charged against a loan or investment of less than 5 million rupees, it must be approved by the supervisory authority together with the recommendation of the branch head.

In view of the above, if interest charged against a loan or investment is not transferred to the income sector, it should be transferred as a suspension of interest.

In case of preservation of a specific provision against the loan, the provision must be made according to the provisions of classification and provision of the loan calculating the required provision. In case of preservation of the general provision against loan, the provision must be made in accordance with the provisions of classification and provision of loan / investment calculating the required provision.

The circular also establishes that the directive has been issued under the powers conferred by article 45 of the 1991 Banking Companies Law, which will take effect immediately.

EAR / MRR / JIM