BB asks banks to continue identifying good borrowers

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

The instruction came as the Bangladesh Bank said good borrowers would only get the 10 per cent rebate on interest or profits as of September 30 last year.

In 2015, the BB unveiled a new policy to provide good borrowers with incentives, including the 10 per cent rebate on interests, to eliminate wilful loan default culture.

Before this, the central bank formulated various policies to rescue struggling big borrowers but never did they come up with any institutional policy to encourage a good lending culture in Bangladesh.

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

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

But banks would have to continue the task to identify the good borrowers and investors, the BB said in a notice yesterday.

Now, banks would identify good borrowers or investors at the end of December every year.

A good borrower would have to have their working capital loans as non-classified as of December of a year and the preceding four quarters and there has to be a satisfactory transaction in the loan account.

In case of demand loans, all credits would have to be adjusted as non-classified until December and in the previous four quarters. The term loan borrowers would have to have 12 preceding instalments cleared on time and their loans would have to carry the status of non-classified in the preceding four quarters, to be eligible as good borrowers.

If a borrower has more than one loan, they have to fulfil each condition for all of the load products, the BB notice said. 

In all cases, if a borrower or their related companies have a classified loan in any bank in the preceding 12 months, they would not qualify as good borrowers.

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

The information about the loan of a good borrower has to be sent to the Credit Information Bureau.