BB waives risk rating provision for biggies

The banks will not have to follow the internal credit risk rating system (ICRRS) while providing loans to large industries and services companies under the Tk 300 billion stimulus package announced by the government amid Covid-19 pandemic.

The Bangladesh Bank (BB) has relaxed the guideline, allowing the banks to disburse loans on the basis of bank-customer relationship, according to a notification issued on Sunday.

It said all the scheduled banks are eligible for providing loans without following the ICRRS from the stimulus package only to help resume such businesses quickly.

The banks have been asked to select their borrowers on the basis of their relationship with customers concerned and make their own risk analysis while offering loans, it added.

Earlier on April 12, the central bank asked the banks to issue a guideline to set 'marginal' credit risk rating as the qualification of borrowers for getting loans under the package.

"We've relaxed the ICRRS policy mainly due to the ongoing coronavirus pandemic," a BB senior official told the FE. He said the banks will have to follow their own best practices while analysing the credit risks.

In that case, he added, the banks will follow the latest prescribed format instead of the earlier one.

"Such an approach is needed for restarting the businesses under the prevailing circumstances," Md Abdul Halim Chowdhury, Managing Director (MD) and Chief Executive Officer (CEO) of Pubali Bank Limited, said without elaborating.

Meanwhile, most of the banks have already started taking preparation to utilise the stimulus package of Tk 300 billion for large industries and services companies through the BB's refinancing scheme.

The central bank has already invited applications from interested banks and non-banking financial institutions (NBFIs) by May 14 to sign participatory agreements (PAs) on receiving refinancing facility.

On April 23, the central bank formed a new refinance scheme worth Tk 150 billion for the large industries and services sector, which are being affected by the coronavirus outbreak.

Under the scheme, lenders will get funds in the form of working capital at 4.0 per cent interest from the central bank, which the end-users will get at 9.0 per cent.

But to avail the refinance facility, banks will have to provide at least 50 per cent of each loan to the industrial and service sector borrowers from their own sources.

"We'll disburse 50 per cent of total loan as refinancing facility to the banks as well as NBFIs concerned after completing the formalities," another BB official said earlier.

The central bank will provide the low-cost refinancing to help the banks implement the government announced Tk 300 billion stimulus package for industries and services entities, according to the officials.

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