Bangladesh Bank (BB) eased the criteria for loan classification and provisioning in a view to help spur economic growth through a faster process of financial inclusion.

 
The loan classification and provisioning criteria has been amended "with a view to expediting the economic growth triggered by the comparatively small scale borrowers and promoting financial inclusion",

the central bank said in a circular issued yesterday.

Under the amended loan classification and provisioning, loans excepting short-term agricultural and micro-credit in the "Special Mention Account" and "Sub-Standard" will not be treated as defaulted loan. However, Fixed Term Loans amounting up to Taka one million in the "Sub-Standard" category will also be treated as default loan.

Earlier in September, the BB stipulated that the Short-term Agricultural and Micro-Credit if not repaid within the fixed expiry date for repayment will be considered past due/overdue after six months of the expiry date.
In the latest circular,

the BB said in case of any installment or part of installment of a Fixed Term Loan amounting up to Taka one million is not repaid within the due date, the amount of unpaid installment will be termed as "past due or over due installment".

In case of such types of Fixed Term Loans, if the amount of past due installment is equal to or more than the amount of installment due within six months,

the entire loan will be classified as "Sub-standard". If the amount of past due installment is equal to or more than the amount of installment due within nine months, the entire loan will be classified as "Doubtful".

If the amount of past due installment is equal to or more than the amount of installment due within 12 months, the entire loan will be classified as "Bad/Loss".

In case of any installment or part of installment of a Fixed Term Loan amounting more than Taka one million is not repaid within the due date, the amount of unpaid installment will be termed as 'past due or over due installment'.

The entire loan will be classified as "Sub-standard" if the amount of past due installment is equal to or more than the amount of installment due within three months and the entire loan will be classified as "Doubtful" when the amount of past due installment is equal to or more than the amount of installment due within six months.