Bangladesh Bank asks banks to continue identifying good borrowers

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The central bank has asked banks to keep their activities to recognize good borrowers and investors to facilitate providing incentives to them.

The instruction came as the Bangladesh Lender said great borrowers would only get the 10 % rebate on fascination or profits as of September 30 this past year.

In 2015, the BB unveiled a fresh policy to provide good borrowers with incentives, like the 10 % rebate on interests, to remove wilful loan default culture.

Before this, the central bank formulated various policies to rescue struggling big debtors but never did they produce all institutional policy to motivate a good financing culture in Bangladesh.

In May 2019, the BB instructed banks to provide 10 % rebate on the interest or profit accrued from operating capital, demand and term loans and investments from October to September of a year.

But after enforcing the cap over lending and deposit costs from April 1, the central bank decided that a great borrower or investor would get the rebate as of September 30, 2019.

But banks would need to continue the process to identify the good borrowers and investors, the BB said in a find yesterday.

Now, banking institutions would identify good borrowers or investors at the end of December each year.

A good borrower would need to possess their working capital loans just as non-classified as of December of a year and the preceding four quarters and there must be a reasonable transaction in the loan account.

In the event of demand loans, all credits would need to be modified as non-classified until December and in the previous four quarters. The word loan borrowers would need to possess 12 preceding instalments cleared promptly and their loans would need to carry the position of non-classified in the preceding four quarters, to meet the requirements as good borrowers.

If a borrower has several loan, they have to fulfil each condition for every one of the load items, the BB find said. 

In every cases, if a debtor or their related companies have a classified loan in any bank in the preceding 12 months, they might not qualify nearly as good borrowers.

If a loan is regularised through a restructuring or rescheduling for the first time for logical causes, they might qualify as a good borrower.

The information about the bank loan of an excellent borrower should be delivered to the Credit Information Bureau.
Source: https://www.thedailystar.net

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