2. What is Loan Classification?
• Loan classification
It is differentiating, grouping or arranging
or categorizing of loans and advances
based on the perceived risk and other
relevant characteristics.
2
4. 1. Continuous Loan:
a. made within certain limit
b. have an expire date for full adjustment,
ex: cash credit, OD
2. Demand Loan:
Loans that become repayable on demand by the bank,
ex: Forced Loan, LIM, PAD, FBP, and IBP
3. Fixed Term Loan:
Repayable within a specific time period & under a
specific repayment schedule. Ex: Doctors Loan, Service
Loan, Consumers Loan, Loan General, GHBL, Project Loan
4. Short Term agricultural & Micro-credit Loan:
Any micro-credits for less than Tk.50,000/= and
Repayable within 12 months.
7. Past due/ overdue
1. Continuous Loan: If not repaid within the fixed expire
date, loan treated as past due/overdue from the
following day of the expiry date.
2. Demand Loan: If not repaid within the fixed expire date,
loan treated as past due/overdue from the following day
of the expiry date.
3. Fixed Term Loan: If any installment or part of installment
is not repaid, unpaid installment will be treated as past
due/overdue from the following day of the expiry date.
4. Short Term agricultural & Micro-credit Loan:
If not repaid within the fixed expire date, loan treated as
past due/overdue after six months of the expiry date.
8. Classification of Loans
UC: Standard
SMA : Special Mentioned Account
SS : Sub-Standard
DF : Doubtful
BL : Bad & Loss
10. (A)Objective Criteria: (BRPD Circular 14 &19)
Types of loan
Types of loan Unclassified
Unclassified Sub-
Sub-
standard
standard
Doubtful
Doubtful Bad/Loss
Bad/Loss
Standard
Standard SMA
SMA
Continuous Loan
Continuous Loan <2
<2 2
2 3
3 6
6 >9
>9
Demand Loan
Demand Loan <2
<2 2
2 3
3 6
6 >09
>09
Term Loan (up to
Term Loan (up to
taka 10 lac)
taka 10 lac)
<3
<3 3
3 6
6 9
9 >12
>12
Term Loan (more
Term Loan (more
than taka 10 lac)
than taka 10 lac)
<2
<2 2
2 3
3 6
6 >09
>09
Short Term
Short Term
Agricultural Credit
Agricultural Credit
&
&
Short Term Micro
Short Term Micro
Credit
Credit
O<12
O<12
12
12 36
36 >60
>60
12
12 36
36 >60
>60
10
11. Calculation of Defaulted Loan
11
Defaulted Loan will be calculated as Stated bellow : (As per
BRPD circular # 8, dated 02.08.2014)
12. Interest of Classified Loan
• 'Sub-standard' and 'Doubtful‘ interest will
be credited to Interest Suspense Account,
instead of Income Account.
• In case of rescheduled loans the unrealized
interest will be credited to Interest Suspense
Account, instead of Income Account.
• 'Bad/Loss' charging of interest in the same
account will cease.
14. (B). Qualitative Judgment:
• If any situational changes occur in the stipulations in terms of which
the loan was extended .
• If the capital of the borrower is impaired due to adverse conditions
• If the value of the securities decreases .
• If the recovery of the loan becomes uncertain due to any other
unfavorable situation, the loan will have to be classified on the basis
of qualitative judgment.
• Besides, if any loan is illogically or repeatedly re-scheduled or the
norms of re-scheduling are violated
• Instances of frequently exceeding the loan-limit are noticed
• Legal action is lodged for recovery of the loan
• The loan is extended without the approval of the proper authority,
it will have to be classified on the basis of qualitative judgment.
14
15. What is provisioning ?
• Provisioning means setting aside certain fund
from current year profit against possible loan
losses.
15
16. Maintenance of provision
• Banks will maintain at the following rates in respect of
classified Continuous, Demand and Fixed Term Loans:
***(BRPD Circular # 05 dt.-29/05/2013) &
(BRPD Circular -16 dated 18.11.14)
16
17. Maintenance of provision
1. Unclassified : 0.25 % against SME
5.00 % (consumer financing)
1.00 % (a. Housing Finance and
2.00% b. Loans for Professionals to set up
business under Consumer Financing Scheme , loans to
brokerage House, Merchant Bank, Stock Dealers etc.
1.00 % (All others including off balance sheet
items (such as Bills for collection, L/C, L/G etc.)
2. Sub-standard : 20%
3. Doubtful : 50%
4. Bad/Loss : 100%
17
18. Short Term Agricultural and Micro Credits:
1.All unclassified Credits :
(irregular and regular) - 1% ***
2.Sub-standard, Doubtful - 5%
3.Bad/Loss - 100%
[***BRPD Circular No- 15 , 27 September, 2017 ]
Maintenance of provision
19. Maintenance of provision
3.Banks will be required to maintain 2% General
Provision against all unclassified Credit Card
loans under Consumer Financing.
**BRPD Circular No. 12, dated Augest 20, 2017]
19
20. Maintenance of provision
3.Banks will be required to maintain 1% General
Provision against all unclassified House Building
Finance loans under Consumer Financing.
**BRPD Circular No. 01, dated February 20, 2018]
20
22. Secured value:
• Eligible Collateral :
• 100% of deposit under lien against the loan
• 100% of the value of government bond/savings certificate under lien
• 100% of the value of guarantee given by Government or Bangladesh Bank
• 100% of the market value of gold or gold ornaments pledged with the bank.
• 50% of the market value of easily marketable commodities kept under
control of the bank
• Maximum 50% of the market value of land and building mortgaged with the
bank**
• 50% of the average market value for last 06 months or 50% of the face
value, whichever is less, of the shares traded in stock exchange.
24. Prerequisites in Generating Auto
CL Report from CBS
Account Opening Date
A/C expire date
In case of Term Loan
1. Total Number of Installments,
2. Installment Size and
3. First Due Date
Amount of collateral security
46. If found any anomalies please generate an Excel file
having :
1.Account Number,
2.Account Open date,
3.Total Number of Installments,
4.Actual Installment Size,
5.Appropriate date of First Installment
6.Due date and
7.Value of Security
8.CL Code.******
57. Security Updating Process
• Security should be updated in case of loans
secured by any collateral security or personal
gauranttee like; CC(H), CC(P), Term Loans,
SHBL, Personal loans etc.
• In case of RCD/Micro Credit and Loans/OD
against deposit no need to update security
58. In Case of Mortgage loans following steps
should be followed to Update Security
Step-1: Security Registration Entry
Step-2: Security Mortgage Entry
Step-3: Authorization
Step-4: Assigning Security to a Limit
Line
Step-5: Security Authorization
100. Important Notes
• In case of loans secured by personal
guarantee like professional loan you have to
follow the following steps:
Step-1: Security Registration (In this case mode
of security creation should be Assignment)
Step-2: Security Authorization
Step-3: Assigning Security to a limit line
Step-4: Authorization
![Short Term Agricultural and Micro Credits:
1.All unclassified Credits :
(irregular and regular) - 1% ***
2.Sub-standard, Doubtful - 5%
3.Bad/Loss - 100%
[***BRPD Circular No- 15 , 27 September, 2017 ]
Maintenance of provision](https://image.slidesharecdn.com/classificationofloansfinal-250427055636-b0888ef7/85/Classification-of-Loans-final-21-03-2022-ppt-18-320.jpg)
![Maintenance of provision
3.Banks will be required to maintain 2% General
Provision against all unclassified Credit Card
loans under Consumer Financing.
**BRPD Circular No. 12, dated Augest 20, 2017]
19](https://image.slidesharecdn.com/classificationofloansfinal-250427055636-b0888ef7/85/Classification-of-Loans-final-21-03-2022-ppt-19-320.jpg)
![Maintenance of provision
3.Banks will be required to maintain 1% General
Provision against all unclassified House Building
Finance loans under Consumer Financing.
**BRPD Circular No. 01, dated February 20, 2018]
20](https://image.slidesharecdn.com/classificationofloansfinal-250427055636-b0888ef7/85/Classification-of-Loans-final-21-03-2022-ppt-20-320.jpg)
