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          The Bangladesh Bank (BB) has issued revised guidelines for classification of loans disbursed under the consumer and small financing to minimise lending risks.
The banks will now have to classify eight categories instead of four under the two types of loans to identify good or bad borrowers.
The categories are: superior, good, acceptable, marginal, special mention, sub-standard, doubtful, and bad and loss, official sources said.
The central bank has already issued a circular in this connection and directed the chief executives of all scheduled banks to follow the new guidelines for grading of such loan portfolios.
Under the small enterprises financing, a loan will be treated as superior when it is secured by cash/cash equivalent collateral and fully secured by government guarantee.
The banks will be required to build a reserve at two per cent of the outstanding balance.
A loan, which is fully secured by collateral other than cash, will be brought under the 'good' category.
The banks will classify loans as 'acceptable' when the loans remain overdue for one to 59 days. The loans should be classified as 'marginal/watch' when they remain overdue for 60 to 89 days.
According to the circular, the provisioning requirement for good, acceptable and marginal/watch list loans will be two per cent each. The provisioning requirement for both consumer credit and small enterprise financing are same excepting the general provisioning, which will be five per cent for consumer loans instead of two per cent, sources in the central bank said.
The loans should be classified as 'special mention account' when they remain overdue for 90 days or more. This unrealised amount should be put in suspense account and should not be credited to income account unless these loans are realised in cash, the circular added.
The banks have to keep a reserve of five per cent against such loans to meet the provisioning requirement.
When the loans are overdue for 180 days or more, they should be classified as 'substandard.' The loans should be treated as 'doubtful' after remaining overdue for 270 days, while they should be treated as 'loss' after remaining overdue for 12 months or more.
The banks will have to build 20 per cent, 50 per cent and 100 per cent reserves against the three categories of loans such as substandard, doubtful and loss of loans respectively to meet the provisioning requirement.
Earlier, the central bank introduced a credit risk grading manual to minimise the lending risks in the banking sector.
Another reports adds: The central bank has asked commercial banks to comply with the existing rules and regulations for detecting suspicious transactions and combating terror financing.
The instructions came at a meeting last Wednesday with the head of central compliance unit (CCU) for implementation of the Anti-Money Laundering Act of the commercial banks. The meeting was held at the conference room of the central bank.
The central bank also directed the banks to submit reports on cash transaction (CTR) amounting to Tk 0.50 million.
But the bankers felt that such instruction will increase the work-load of banks to prepare reports on such cash transactions.
Deputy Governor of the BB Muhammad A (Rumee) Ali presided over the meeting. Executive Director of the central bank Nazmul Hassan also attended.
During the meeting, the bankers proposed to raise the amount to Tk 1.0 million from Tk 0.50 million for CTRs. This will give relief to middle class clients of the banks.
The central bank, however, rejected the proposal saying that the amount had been fixed in line with the recommendations of a committee. The committee was formed earlier comprising senior officials of both state-owned and private commercial banks to find out the cash transactions mode of the banks.
The committee recommended for fixing the CTR amount on the basis of its study, which was conducted during April-June period this year, sources concerned said.
The meeting took a six-point decision for complying with the existing Anti-Money Laundering Act to check illegal fund transfers through banking channel.
The central bank officials asked the bankers for taking measures to submit reports on CTR and suspicious transactions report (STR) to its concerned department in time.
The bankers have given commitment to inform the central bank about the STRs and submit the reports on CTR in line with BB's directives.
The central bank has already expressed concerned over poor response from the banks for submission of the STR in line with the existing rules and regulations.
"The banks will have to comply with rules and regulations relating to the STC and STR to protect the interest of country's banking sector," a BB senior official told the FE Wednesday after the meeting.