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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 today.
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 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).
However, to ensure accountability, banks are strictly required to maintain documented records explaining the specific reasons why the renewal was not finalized within the original timeframe.
The circular also introduced stringent requirements for credit discipline regarding sanctioned limits. Continuous loans may be renewed only if any amount exceeding the sanctioned limit is fully adjusted.
If such an adjustment is not made, the entire loan must be adjusted. Furthermore, the central bank has strictly prohibited the transfer of excess loan amounts into new loan accounts or any other accounts to circumvent these adjustment rules.
Issued under Section 45 of the Bank Company Act, 1991, the new directive replaces the earlier instructions issued through BRPD Circular No. 06/2025.
The directives come into immediate effect and will remain valid until December 31, 2027.
