Bangladesh Bank (BB) on Tuesday directed all scheduled banks to initiate the renewal process for continuous loans at least two months before their expiry to ensure uninterrupted business and trade activities amid the prevailing economic situation, reports BSS.
The directive was issued through BRPD Circular No. 05. It builds on earlier definitions of continuous loans and overdue status set out in BRPD Circular No. 15 dated November 27, 2024.
Under the new guidelines, banks must proactively begin the renewal process — including receiving client applications and required documents — no later than two months before a loan’s scheduled expiry date.
Acknowledging that factors beyond the control of banks or clients may delay renewals, the central bank said loans may still be renewed until they are classified as non-performing loans (NPLs). However, banks must maintain proper documentation explaining why the renewal was not completed within the original tenure.
The circular also tightened credit discipline regarding sanctioned limits. Continuous loans may only be renewed if any amount exceeding the approved limit is fully adjusted. Failing that, the entire loan must be regularised.
The central bank has also prohibited transferring excess loan amounts into new or other accounts to bypass adjustment requirements.
Issued under Section 45 of the Bank Company Act, 1991, the directive replaces earlier instructions issued through BRPD Circular No. 06/2025. The new rules take immediate effect and will remain valid until December 31, 2027.
Bd-pratidin English/ Jisan
