The Bangladesh Bank rejected the demand to raise the single borrower exposure limit in a circular issued today. The existing rules, which cap the aggregate principal amount of funded and non-funded exposure to a single person or group at 25% of the regulatory capital, remain unchanged. The circular stated that applications to relax this limit were contrary to the central bank’s instructions. Before April 1, 2022, banks could lend up to 35% of their total liabilities to a single person or entity. A senior official of the central bank revealed that many customers have been granted loans in violation of these rules. The central bank has instructed banks to adjust their loan limits, but compliance is lacking in many cases. According to existing rules, banks with defaulted loans below 3% can provide large loans up to 50% of total capital, while those with more than 20% defaulted loans can provide only 30%.
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