In accordance to BRPD Circular No. 14 dated 23 September 2012, BRPD Circular No. 05 dated 29 May 2013 and BRPD Circular No. 03 dated 21 April 2019, it has now been decided that to facilitate Cottage, Micro and Small industries of the country and to encourage participation of the banks in disbursing Cottage, Micro and Small credits, banks are hereby instructed to classify and maintain provisions against such credits in the following manner:
3. Loan Classification of Cottage, Micro and Small credits under CMSME:
3.1. The criteria for past due/overdue and Special Mention Account (SMA) of any Continuous/Demand/Fixed Term Loan under this category will be same as illustrated in BRPD Circular No.03/2019 and BRPD Circular No. 14/2012 respectively.
3.2. If a Continuous Loan, Demand Loan, Fixed Term Loan or any instalment(s)/part of instalment(s) of a Fixed Term Loan remain(s) past due/overdue for a period of 06 (six) months or beyond but less than 18 (eighteen) months, the entire loan will be classified as “Sub-standard (SS)”.
3.3. If a Continuous Loan, Demand Loan, Fixed Term Loan or any instalment(s)/part of instalment(s) of a Fixed Term Loan remain(s) past due/overdue for a period of 18 (eighteen) months or beyond but less than 30 (thirty) months, the entire loan will be classified as “Doubtful (DF)”.
3.4. If a Continuous loan, Demand loan, Fixed Term Loan or any instalment(s)/part of instalment(s) of a Fixed Term Loan remain(s) past due/overdue for a period of 30 (thirty) months or beyond, the entire loan will be classified as “Bad/Loss (B/L)”.
4. Provision for Cottage, Micro and Small credits under CMSME:
a) All unclassified credits: 0.25%
b) Classified as ‘Sub-standard’: 5%
c) Classified as ‘Doubtful’: 20%
d) Classified as ‘Bad/Loss’: 100%.
5. Cottage, Micro and Small credits under CMSME shall have to be reported in CL-2, CL-3 and CL-4 depending upon their loans and advances category. Whereas, Short-term Micro-Credit will include micro-credits not exceeding the amount determined by the Agricultural Credit Department of Bangladesh Bank from time to time and repayable within 12 (twelve) months and have to be reported in CL-5 accordingly.