Bangladesh Bank has issued new guidelines for the country’s scheduled banks, removing the existing ‘time limit’ for writing off defaulted loans. From now on, if a loan is classified as bad or loss-making and the possibility of its recovery is slim, that loan can be written off without waiting for the deadline.
The Banking Regulation and Policy Department (BRPD) issued a notification in this regard on Monday (November 19). The new guidelines state that all bad loans with low possibility of recovery in the future can be written off, but priority should be given to old classified loans.
According to the new rules, the borrower will have to be informed about the matter through a notice at least 10 working days before the write-off. This circular has canceled the previous condition—that is, only bad loans can be written off if there is a continuous bad loan for two years. It has also been informed that this guideline will be effective immediately.
