Loan classification, provision rules for CMSMEs relaxed

The Bangladesh Bank has relaxed the loan classification and provision-related rules for banks against credits issued to the cottage, micro, small and medium entrepreneurs for the outgoing 2021.

The central bank issued a notice in this regard on Wednesday, allowing banks to keep CMSME sector loans unclassified if the borrowers clear 15 per cent of the overdue amount for the January-December period of 2021 by December 31, 2021.

In August this year, the regulator had allowed banks to keep any loans unclassified against recovery of 25 per cent of the overdue amount within December 31 this year. The regulator also allowed banks to realise the entire year’s interest on CMSME loans in their income accounts if such loans remain unclassified.

A separate notice, issued by the central bank on the same day, asked banks to keep aside 1.5 per cent additional provision against CMSME loans, instead of the existing 2 per cent. The additional 2 per cent provision requirement against other loans will remain unchanged.

Previously, the regulator asked banks to keep an additional 2 per cent provision against all sorts of loans in addition to the existing regular provisions.