The central bank of Bangladesh has relaxed provisioning against unclassified loans of all categories under consumer financing, excluding house finance to expedite the flow of consumer loans in the banking system.
Under the revised provisions, the banks will have to maintain 2.0 per cent general provision instead of 5.0 per cent earlier against unclassified loans under consumer financing, according to a notification, issued by the Bangladesh Bank (BB) on Tuesday.
In the case of house finance, the required rate of general provision will remain the same at 1.0 per cent, it added.
“We’ve slashed the requirement of provisioning against such unclassified loans aiming to facilitate cottage, micro, small and medium enterprises (CMSMEs) through boosting consumer financing,” Abu Farah Md. Naser, an executive director of the BB, told the FE while explaining the main objective of the relaxation.