Bank Rate reduced to 4% p.a.

Bangladesh bank has reduced Bank Rate from 5% p.a. to 4% p.a. In this regard, Bangladesh Bank issued a circular on 29th July 2020.

CLASSIFICATION AND INTEREST SUSPENSE OF RESCHEDULED LOANS: BRPD Circular no. 15, dated September 23, 2012

Rescheduled loans may be put into any category of classification by the bank considering the existing financial soundness and repayment capacity of the borrower, subject to the accumulated amount in interest suspense account not being taken into income account, unless actually realized. Upon classification, applicable provisions have to be maintained, according to the Master Circular: Loan Classification and Provisioning (BRPD Circular No. 14/2012). These classifications will be reviewed by Bangladesh Bank inspectors. However, regardless of the classification category into which the loan is placed by the bank, a rescheduled loan will not be considered a "defaulted loan," and the borrower will not be considered a "defaulted borrower" as these terms are understood in the context of section 27KaKa(3) [read with section 5(GaGa)] of the Banking Companies Act, 1991, unless such loan has not been repaid after reaching the maximum number of allowable reschedulings. Interest accrued on rescheduled loans will be subject to the accounting treatment that is appropriate for the classification category of the loan, in line with the Master Circular: Loan Classification and Provisioning (BRPD Circular No. 14/2012) just as if the loan had not been rescheduled.

Foreign exchange transaction for IT/Software firms

As per Bangladesh Bank circular FE circular no. 23 dated August 10, 2016, Authorized Dealers are allowed to remit abroad up to USD 25,000 on behalf of IT/Software firms to meet their bonafide expenses in a calendar year (previous limit was USD 20000). Accordingly, the limit for issuance of International Card to a nominated official of IT/Software firm is also increased to USD 2,500 from USD 2,000 within the revised total limit of USD 25,000.

Incentive to the Good Borrower

As per BRPD circular no. 06 dated March 19, 2015, BRPD circular letter no 16 dated 30^th December 2015 and BRPD circular letter no. 03 dated February 16, 2016.

A borrower will be treated as Good Borrower for incentives if he fulfill following criteria:

1.       Continuous Loan borrowers having consecutive 03 years unclassified-standard status and Demand Loan borrowers having consecutive three years timely adjustment record with unclassified-standard status and satisfactory transaction as per sanction in both cases.

2.       Term Loan borrowers having consecutive 03 years (excluding grace/ moratorium period) timely installment repayment with unclassified-standard status and satisfactory transaction as per sanction. Grace period has to be excluded for considering 03 years period for a term Loan.

3.       In all cases borrowers who do not have adversely classified loan in its own name or in the name of interest related concern with any bank or financial institution for last 03 years.

4.       In all cases borrowers do not have SMA loan status in its own name in last 03 years.

Transaction for the year [2015] and previous 02 years to be considered as consecutive three years.

Incentive to the Good Borrower:

Good borrower will get interest rebate in 4^th year based on their previous three years performance:

1.      In case of continuous loan subject to 3 consecutive years continuous adjustment of loan, Good Borrower will get 10% rebate on last (3^rd) year realized interest/profit.

2.      In case of Demand loan 10% rebate on 3^rd year realized interest from the account.

3.      In case of Term Loan 10% rebate on 3^rd year realized interest from the account

Subsequently, if client qualify for the good borrower they will get same benefit.

Note: Banks may also arrange yearly program to honor the good borrower.

Provisioning: Banks must keep sufficient provision for providing incentive to the client next year.

Date of effective: from 1st January 2016.