Bangladesh Bank Eases Loan Distribution Rules

To keep the country’s business activities running smoothly, Bangladesh Bank has relaxed rules for loan distribution. Banks can now provide loans or investments to customers without being strictly required to implement internal credit risk rating systems (ICRRS).

On Wednesday (August 20), Bangladesh Bank issued a circular regarding this matter, sending it to the CEOs of all commercial banks. The circular states that the directive is effective immediately.

Previously, determining risk through a complex process, including special audits, was mandatory for approving loans or investments. This process often caused delays and increased costs, making it difficult for many small and medium entrepreneurs to access credit. Considering this reality, the new relaxation has been introduced.

However, the circular cautions that before approving any loan, banks must still assess risk according to their own internal policies. Decisions should consider the customer’s cash flow, business condition, and collateral. Banks must also ensure compliance with board requirements before distributing loans.

Furthermore, each loan or investment agreement must clearly mention the indicators used for risk assessment. Bangladesh Bank believes that this step will make financing easier for entrepreneurs and accelerate economic activities.