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BB relaxes credit rating rules amid pandemic

Siddique Islam | February 24, 2021 00:00:00

The central bank has relaxed the requirements of Internal Credit Risk Rating System (ICRRS) to help businesses avail credit facilities from the banks amid the Covid-19 pandemic, officials said.

The ceiling of marginal internal credit risk rating score has been brought down to 55 per cent from 60 per cent earlier, according to a notification, issued by the Bangladesh Bank (BB), on Tuesday.

It said the BB relaxed the rules considering the adverse impact of the pandemic on the country's overall business activities.

Besides, the banks are allowed to calculate the rating score for 2021 on the basis of any one audited balance sheets for 2019 and 2020, it added.

In case of fiscal year, the banks may consider June 30, 2019 or June 30, 2020 for assessing the score while December 31, 2019 or December 31, 2020 would be applicable for the same purpose on the basis of calendar year, the officials explained.

Bangladesh Textile Mills Association (BTMA) earlier sought relaxation of minimum scoring under the ICRRS in order to avail credit facilities from the banks, considering the pandemic situation.

"We've relaxed the requirements under the ICRRS considering overall business activities not only for the apparel and clothing sector," a BB senior official told the FE.

He said it would help businesses to avail loan facilities despite the pandemic.

The BTMA had proposed the central bank to bringing down the marginal score to 40 per cent from 60 per cent for all the entrepreneurs of the apparel and clothing sector.

"It will help the businesses slightly," Mohammad Ali Khokon, president of the BTMA, told the FE in an instant reaction.

The ICRRS refers to the system to analyse a borrower's repayment ability based on information about a customer's financial condition, including their liquidity, cash flow, profitability, debt profile, market indicators, industry and operational background, management capabilities and other indicators.

The central bank had earlier introduced the guidelines on the ICRRS, aiming to reduce the volume of classified loans through maintaining credit risk exposure within acceptable levels.

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