BB outlines guidelines for banks’ non-banking assets

The Bangladesh Bank on Monday unveiled a guideline on non-banking assets saying that the borrowers should be released from the defaulted zone if his or her loans are consolidated by its non-banking assets.

Basically, non-banking assets are those financial assets acquired by the banks to settle their loans. When a borrower is unable to repay the amount of the loan, then the bank acquired the collateral against the loans. These are known as non-banking assets.

The BB said in the guidelines that the banks will have to complete the registration and mutation of the assets, ensure the physical possession within the quickest possible time, and include the assets in the balance sheet after adjusting the dues.

Banks are asked to assess the value of the assets prudently and the valuation must be done by a three-member committee comprising officials who are experts in the field.

The BB said that before adjusting the non-banking assets against loans, banks will have to determine the total outstanding dues, which comprise unrealised loans and interests.

The unrealised interest has to be transferred to the interest suspense account, it said.

The guidelines said that if the market value of the assets is higher than the loan outstanding, the loans have to be adjusted, and the remaining portion cannot be part of the balance sheet.

In such cases, the borrowers will have to be released from defaulted zone.

If the market value is lower than the loan outstanding, the loans cannot be adjusted entirely. So, the borrowers cannot be completely relived of his liability.

Under such a scenario, the unadjusted debts have to be stated as loans, and all legal steps have to be taken to recover the loans, said the new guideline.