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BB issues directive on loan write-offs
Bangladesh Bank (BB) has issued new guidelines concerning the procedures for writing off specific loan accounts, focusing on classified debt that is unlikely to be recovered.
“Loan accounts that are classified as bad and loss and possess slim prospects for future recovery can be written off,” said a BB circular issued today.
The circular introduced a specific prioritization mechanism for these actions. It mandated that loans classified as bad and loss that are chronologically older should be written off on a priority basis. This suggests an effort to clear older, stagnant non-performing assets from the books first.
For any loan account write-off, the banking institution must ensure the borrower is informed of the decision. This must be done by providing a notice to the borrower at least 10 (ten) working days prior to the actual write-off of the loan account, reports BSS.
This new instruction aims for the proper implementation of the directives described in the previously issued BRPD circulars.