The Bangladesh Bank has rejected a request from the Bangladesh Association of Banks (BAB) to delay implementing new rules that shorten the classification period for loans to be considered overdue. During a meeting on September 18, bank chairmen cited economic challenges as the reason for seeking a six-month postponement, but a central bank spokesperson confirmed that the decision remains unchanged, highlighting that banks have already had sufficient time to adjust.
The new rules will classify loans as overdue three months after the due date starting September 30, 2024, and from March 31, 2025, loans will be considered overdue the day after the due date. This change aligns with international standards and is a condition set by the IMF for loan agreements, which the central bank is committed to upholding.
Some bank chairman, including Tanjil Chowdhury of Prime Bank, argue that the BAB should support the government’s proposed financial reforms, emphasizing the need for adjustments to address the challenges faced by weaker banks. However, concerns have been raised about the legal feasibility of the central bank’s proposed support for struggling institutions. The central bank aims to maintain a strict timeline to ensure financial stability and compliance with international practices.
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