Bangladesh Bank has relaxed the guidelines for writing off small bad loans as it considered the litigation cost is sometimes higher than the amount of a loan.

It allowed the scheduled banks to write-off classified loans below Tk50,000 without filing any case.

The banks will, however, have to comply with other guidelines while writing off the loans, said a circular issued on Thursday.

Earlier, the banks had to write off any bad loan through filing case and keeping 100% provision.

The banks go for writing off a loan when it considers there is no hope to get the money back.

The scheduled banks are allowed to write off loans, having been adversely classified for more than 5 years, by maintaining a 100% provision.

The banks have written off a total classified loan of Tk242bn till 2012. 

News:Dhaka Tribune/08-Nov-2013