Banks asked not to show receivables as income unless realised

The central bank has instructed the commercial banks not to transfer the interest receivables from the rescheduled and restructured loans or the loans that were given a one-time exit facility to their income account (A/C) unless realised in cash.
Top executives of the scheduled banks have been requested to comply with the instruction immediately, according to a Bangladesh Bank (BB) circular issued on Thursday.
Interest receivables are the amount that the banks have earned but not yet received in cash.
At the same time, the banks will have to keep an additional 2.0 per cent general provision against such loans instead of existing 1.0 per cent.
The banks will have to put aside an additional 1.0 per cent provision instead of existing 0.25 per cent against such loans of the cottage, micro, small and medium enterprises.
The circular said the provisions have to be transferred to the Special General Provision-Covid-19 account and it cannot be transferred to any other accounts until further directive from the central bank.
The BB says that if the loans are fully repaid, banks can transfer the additional general provision to their income accounts at their own discretion. And, when the classified loans are backed by a required specific provision, the additional general provision can be transferred to the respective accounts.
It also mentioned that the lenders can show the interest receivables for 2022 as income on their books on the term loans that have been given a relaxed repayment facility up to December 2022.
Earlier on December 18 last, the BB relaxed its loan repayment policy, asking the big borrowers to pay half of the industrial credit for the last quarter (October-December) by this year to avert the classified status.
The latest move of relaxation comes as the real income of borrowers has severely affected due to the severe impacts of the prolonged Russia-Ukraine war.
Meanwhile, the BB in another circular asked all commercial banks to relax the margin rule in case of opening letter of credit (LC) against the import of lubricants to ensure uninterrupted power generation and industrial operations across the country.
The bankers can fix the margin rate based on their relationship with the customers bypassing the existing margin of 75 per cent, it said.
The circular stated that the LC margin can be relaxed for lubricants as well as the goods required for its production to keep the supply normal, industrial activities running and power generation uninterrupted.

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