Banks asked to initiate loan renewal process 2-month before expiry

 
Bangladesh Bank (BB) today 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.

The central bank stipulated these directives through BRPD Circular No. 05, issued on Tuesday. 

The instructions aim to streamline credit management by building upon the definitions of continuous loan and past due or overdue status previously established in BRPD Circular No. 15, dated November 27, 2024, according to BSS report. 

According to the new guidelines, banks must proactively begin the renewal procedure-which includes receiving client applications and required documentation-no later than two months prior to a loan's scheduled expiration date.

Recognizing that factors beyond the control of banks or clients can sometimes impede the renewal process within the original tenure, the central bank has provided a regulatory safety net. 

Under such circumstances, loans may still be renewed up until the point they are classified as Non-Performing Loans (NPLs).