BB relaxes rules on general provision against off-balance sheet financing
Wednesday, 19 September 2007
FE Report
The Bangladesh Bank (BB) has relaxed its rules relating to maintaining the general provision against off-balance sheet financing in line with bankers' request, official sources said.
Under the amended rules, the banks will have to maintain 0.50 per cent general provision against off-balance sheet exposures like letters of credit (LCs) against imports instead of 1.0 per cent. It will come into effect from December next. But the banks will have to keep 1.0 per cent general provision against the same from December 31, 2008.
The central bank issued a circular in this connection Tuesday and asked the chief executives of all scheduled banks to maintain the general provision against off-balance sheet financing in line with the latest directives.
"We have reviewed the matter in line with the bankers' request," a BB senior official told the FE Tuesday, adding that the banks will get some relaxation to maintain such rules.
Under the rules, the banks will have to keep more funds for provisioning against the off-balance sheet exposures from their profits that may bring a negative impact on its profitability reducing their capacity of offering dividends to the shareholders, sources in the banking sector said.
Meanwhile, the central bank issued another circular on the day stating that any managing director or chairman of a bank will not be allowed to work as consultant of the bank after retirement.
The Bangladesh Bank (BB) has relaxed its rules relating to maintaining the general provision against off-balance sheet financing in line with bankers' request, official sources said.
Under the amended rules, the banks will have to maintain 0.50 per cent general provision against off-balance sheet exposures like letters of credit (LCs) against imports instead of 1.0 per cent. It will come into effect from December next. But the banks will have to keep 1.0 per cent general provision against the same from December 31, 2008.
The central bank issued a circular in this connection Tuesday and asked the chief executives of all scheduled banks to maintain the general provision against off-balance sheet financing in line with the latest directives.
"We have reviewed the matter in line with the bankers' request," a BB senior official told the FE Tuesday, adding that the banks will get some relaxation to maintain such rules.
Under the rules, the banks will have to keep more funds for provisioning against the off-balance sheet exposures from their profits that may bring a negative impact on its profitability reducing their capacity of offering dividends to the shareholders, sources in the banking sector said.
Meanwhile, the central bank issued another circular on the day stating that any managing director or chairman of a bank will not be allowed to work as consultant of the bank after retirement.