DHAKA — Bangladesh Bank has eased the single-borrower exposure limit, allowing a bank to extend up to 25 percent of its total capital in funded loans to a single client, up from 15 percent previously, the central bank said in a circular Thursday.
Under no circumstances may the combined funded and non-funded exposure to a single client exceed 25 percent, the central bank said. The limit on a bank’s large loans has also been raised. The new directive will remain in force until June 30, 2028.
The conversion factor for non-funded exposures has been set at 25 percent, down from 50 percent, the circular said. That means banks will calculate 25 percent of total non-funded loans in determining their large-loan limit. The facility will remain in effect until June 30, 2027.
The conversion factor will then rise in stages: to 30 percent by Dec. 31, 2027; to 40 percent by Dec. 31, 2028; and to 50 percent by Dec. 31, 2029. The previous provisions will be fully reinstated from Jan. 1, 2030.
A Bangladesh Bank official said a single client can borrow up to 25 percent of a bank’s capital combining funded and non-funded loans, of which 15 percent may be funded and 10 percent non-funded. Previously, no client could receive more than 15 percent in funded loans. A client may now take up to 25 percent, but only if no non-funded loan is taken, the official said. If a client takes 20 percent in funded loans, 5 percent may be given as non-funded.
As an example, the official said that previously a non-funded letter of credit worth 100 taka could be converted to a funded loan at 50 taka. It can now be converted at 25 taka. The change will be phased in over several stages.
For large loans, Bangladesh Bank has redefined how much a bank may lend in large-size loans as a share of its total loans and advances, depending on the amount of classified loans.
Under the circular, a bank with up to 3 percent classified loans can currently extend large loans of up to 50 percent of its total loans and advances. Under the new rule, a bank with up to 10 percent classified loans will be allowed to extend large loans of 50 percent of its total loans and advances. Similarly, banks with classified loans above 3 percent and up to 5 percent can now extend large loans of 46 percent. Under the new rule, banks with classified loans above 10 percent but at or below 15 percent will be allowed to extend 46 percent.
Banks with classified loans above 5 percent and up to 10 percent can now extend large loans of up to 42 percent of their total loans and advances. Under the redefined rule, banks with classified loans above 15 percent but at or below 20 percent will be allowed to extend large loans of up to 42 percent. Under the existing circular, banks with classified loans above 10 percent and up to 15 percent could extend large loans of up to 38 percent. Under the new rule, banks with classified loans above 20 percent but at or below 25 percent may extend large loans of 38 percent.
Banks with classified loans above 15 percent but below 20 percent can currently extend large loans of up to 34 percent of total loans and advances. Under the new rule, banks with classified loans above 25 percent but at or below 30 percent will be allowed 34 percent. Banks with classified loans above 30 percent will be allowed large loans of up to 30 percent of total loans and advances. In any case, total large loans may not exceed 600 percent of a bank’s capital at any time, up from 400 percent previously.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report