What are the policies for writing off loans and advances of Bank in Bangladesh?

Answer:

·    Banks may, at any time, write off loans classified as bad/loss for which 100% provisions have been kept and cases have been filed in the court of law. However, banks may write-off default loans below Tk 50,000 without filing suit against the borrowers.32. Under the process the oldest bad/loss classified loans should be considered first for written off. 􀂾 Banks may write off loans by debit to their current year's income account where 100% provision kept is not found adequate for writing off such loans.

·    All out efforts should be continued for realizing written off loans. Cases must be filed in the court of law before writing off any loan for which no legal action has been initiated earlier.

·     A separate "Debt Collection Unit" should be set up in the bank for recovery of written off loans.

·     In order to accelerate the settlement of law suits filed against the written off loans or to realize the receivable written off loans any agency outside the bank can be engaged. A separate ledger must be maintained for written off loans and in the Annual Report/Balance Sheet of banks there must be a separate "notes to the accounts" containing amount of  cumulative and current year's loan written off.

·     Prior approval of Bangladesh Bank shall have to obtained in case of writing off loans sanctioned to the director or ex-director of the bank or loans sanctioned during the tenure of is directorship in the bank to the enterprise in which the concerned director has interest.