Bangladesh Bank (BB) has introduced a new guideline on Thursday to shorten the leash on rising default loans.
The new policy will be will be effective from the next fiscal year beginning on July 1, as per a bdnews24.com report.
“The new guideline will help reduce the risk of default loans in the banking sector once it is implemented," said Governor Fazle Kabir while launching the guideline at the Bangladesh Institute of Bank Management in the capital.
The guideline called Internal Credit Risk Rating aims to help financial institutions manage and control credit risks they incur through lending and managing the creditworthiness of borrowers and the quality of credit transactions.
The guideline on credit risk management was released at a time when non-performing loans in the banking sector continued to rise.
The commercial banks have been disbursing the loans in line with a circular called Credit Risk Guideline Manual issued by the Bangladesh Bank in 2005.