Professional Documents
Culture Documents
Types of loan Past Due/Over Due Treatment Unclassified Sub- Doubtful Bad/ Loss
Standard
Standard SIMA
From next day of expiry <2 Months 2 to < 3 3 to < 6 6 to < 9 >9
Continuous Loan Months
Months Months Months
From next day of expiry <2 Months 2 to < 3 3 to < 6 6 to < 9 >09
Demand Loan Months
Months Months Months
Term Loan Amount of unpaid installment <3 Installment ? to < 6 6 to < 9 9 to < 12 > 12
( Inst amount up to taka 10 lac ) : From next day of expiry N Installment Installment Installment Installment
Short Term Agricultural Credit After six months of expiry 12 to <36 36 to <60 >60
0< 12 Months Months Months Months
&
Short Term Micro Credit 12 to <36 36 to <60 >60
Months Months Months
Provisioning:
General Provisioning Specific Provisioning Provision for Short Term Agricultural &
Micro Credit
SME 0.25% Sub Standard 20% Unclassified ( Irregular & Regular ) 1%
Consumer Finance ( except House Fin & Prof Loan ) 5% Doubtful 50% Sub Standard & Doubtful 5%
Housing Finance under Consumer Finance 1% Bad & Loss 100% Bad & Loss 100%
Loans for Professionals to set up business under Consumer Financing Scheme 2%
Credit Card Finance 2%
Loans to brokerage House, Merchant Bank, Stock Dealers etc. 2%
All unclassified Loan 1%
Off Balance Sheet Item 1%
SMA 5%
26/02/ 2018
4. Short-term
Agricultural
& Micro- Credits
1
*
nd
Date: Saturday 22 July 2017
Time: 10:30 am
th
Venue: Mercantile Bank, IT Division, Head Office, Sun Moon Tower, 8 Floor, Dilkusha C/ A, Dhaka.
_<u
Q
1. Muhammad Nurul Afsar, AVP ( S)
E Finance ( 2 ) Head Office
0»
E 2 . Md. Anwar Hossain, AVP ( S) 10:30 - 13:30
o
> 1. Suvash Chandra Biswas, SVP ( S)
at
3 2. Muhammad Shams-ul- Arifin, VP ( S)
4
-* Interface &
rH ITS ( 3 ) & 3. A . K . M. Ahasan Kabir, SAVP ( S )
Other Technical
BUET ( 3 ) 4. Prof. Dr. Md. Saidur Rahman Details
<
LU
5. Prof. Dr. Mahmuda Naznin
6. Dr. Muhammad Abdullah Adnan
Lunch Break ( 1330- 1430 )
Loans & 1. Md. Shirajul Islam, SAVP ( S )
Branch & HO
{/ )
Advances( 2 ) 2. Mirza Kamrul Hassan Shanto, AVP ( S)
Ol
-Q 1. Mohammad Shiful Islam Miah, AVP ( S )
E Treasury ( 2 ) Head Office 14:30 - 17:30
OJ
fM
E 2. Mohammed Forhad, FAVP ( S )
X
l/> 1. Mohammad Ataur Rahman, FAVP
< Trade ( 2 ) Head Office
LU
2 . Shakh Raju Ahamed, FAVP
Appreciate if you please arrange to keep stream wise ( General Banking, Reports, Finance, Loans & Advances,
Treasury, Trade Finance, Core Technical etc. ) appropriate resources for functional and technical presentation
based on your current system during site visit .
\
26/02/ 2018
2
04 / 02 / 2015
-
t
Introduction:
CLASSIFICATION PROCESS
TEMENOS (T24) software was implemented in Mercantile
IN TEMENOS ( T 24 ) Bank Ltd. on 14/11/ 2013. Since inception classification
has been a burning issue of this software. From the
beginning TEMENOS has Informed us that they will
Tcmenos T24 CL Program develop a program which will take care of the
classification problem. Since then there has been
Bangladesh Bank Guideline numerous number of meetings & discussion between
TEMENOS & our team regarding the issue. During this
& period they have provided several programs in different
instances. But none of the program complied Bangladesh
ITPT Developed CL Program Bank ( BB ) guideline. In the meantime, our IT Project
Team has developed a program (ITPT program)
complying BB guideline which has already been
presented to our Management in December 2014.
04/ 02/ 2015 IT Project Team, Mercantile Bank Limited, MO, Dhaka 2
1
r*
26/02/ 2018
•
•
^
( I ) Unclassified . 25 % against SME
-^
5.00 % (consumer financing) * CA/ 3 2 Vj
2.00 % on
- ^
_
(4) Bad/ Loss : 100%
3
04 / 02 / 2015
ITPT CL Program complied the above BB Guideline. ITPT CL Program complied the above BB Guideline .
04 / 02/ 2015 IT Project Team, Mercantile Bank Umlted, HO, Dhaka 7 04 / 02/ 2015 IT Project Team, Mercantile Bank Umlted, HO, Dhaka 8
2
Bank Guarantee ( BG ) :
to pay a
A bank guarantee is an unconditional undertaking of the bank on account of its customer in favour of the beneficiary
.
specified amount of money if the customer (on account of which guarantee is issued ) fails to fulfill the contractual obligations
Features / Norms :
1. The guarantee is unconditional and irrevocable.
11 Bank is obliged to pay the beneficiary upon lodgment of claim by the beneficiary.
111. Guarantee are of different types:
a . Bid Bond ( BB): This guarantee is issued on behalf of a bidder/contractor (customer) to participate in a tender
favouring tender inviting authority. If the customer becomes the successful bidder, the work /supply awarding
authority asks for submission of Performance Guarantee and return the original Bid Bond. If the customer
becomes the unsuccessful bidder, the work /supply awarding authority returns the bid bond immediately after
tender.
b. Performance Guarantee ( FG ) : This guarantee is issued on account of the contractor (after being successful
bidder) favouring the work /supply order awarding authority for getting formal work / supply order. Usually its
validity covers the work order validity plus warranty period.
c. Advance Payment Guarantee ( APG ) : This guarantee is issued on behalf of contractor (Customer ) favouring the
work / supply order awarding authority against advance made by them . Bank's liability under APG is liquidated
gradually as per adjustment of the advance with the Work Awarding Authority.
d . Retention Money Guarantee / Retention Bond / Warrantee Guarantee: This guarantee is issued on behalf of
contractor (Customer) favouring the work /supply order awarding authority after completion of work /supply
order for withdrawing the money retained by them from the bills. Usually its validity ends with the
warranty / defect liability period .
e. Payment Guarantee / Suppliers Credit Guarantee: This guarantee is provided in favor of the
suppliers/service providers and on behalf of the Customers to avail certain amount of supplies/services on
credit
f. Guarantee against Counter Guarantee of other Bank: This Guarantee is given by Banks normally on behalf of
their customers to another bank. It happens when, by law, a foreign bank even of good or best standing, is not
authorized to issue guarantee in favor of resident in a specific country but only allowed to instruct a local bank
to issue a bank guarantee on its behalf .
g- Customs Guarantee: This guarantee is issued on account of the customer favouring the Customs Authority of
Bangladesh to clear imported goods postponing payment of customs duty. Usually exporters avail this kind of
the guarantee.
h. Other Bank Guarantees: Besides these, time to time Bank provides different other guarantees in the name of
' Bank Guarantee' to meet customer requirements.
General Covenants:
specific to
While sanctioning credit facility, Bank will set some covenants. Some of the covenants will be general and others will be
a particular credit facility and / or customer. General covenants may be as follows:
0 The customer shall not sell or transfer the ownership of the business / factory / shop/ vehicle etc until bank dues are
fully paid or without NOC of the bank
ii ) Nature of business cannot be changed without prior approval of the bank.
iii) Capital in the business of the borrower cannot be reduced without prior approval of the bank.
iv) The borrower shall not make any amendment or alteration in Memorandum & Article of Association without prior
approval of Bank
v) The customer shall not borrow from any other source without prior approval of the Bank.
vi ) The customer shall submit financial statements within 30 days after yearend .
,
vii ) Bank will have the authority to debit client's account to keep insurance policy with other charges, commission
interest including stamps cost etc. in force.
viii ) Other covenants as set by the sanctioning authority.
The End
Page 20 of 29
Abbreviation :
-
ABP Accepted Bills for Payment
CAR - Capital Adequacy Ratio .
MCR - Minimum Capital Requirement (10 % of total RWA from July 2011)
-
RWA Risk Weighted Assets.
-
LIBOR London Inter Bank Offered Rate
-
MICR Magnetic Ink Character Recognition
SND- Special Notice Deposit
-
EFTN Electronic Fund Transfer Network
-
PEPS Politically Exposed Persons
CTR - Cash Transaction Report (Tk 5.00 lac + )
-
STR Suspicious Transaction Report (Any amount if suspicious)
-
CAMLCO Chief Anti Money Laundering Compliance Officer
-
BAMLCO Branch Anti Money Laundering Compliance Officer .x
-
CRR - Cash Reserve Requirement ( 6.50 %} * ^ =
SLR Statutory Liquidity Requtfementjjj.5 % 13.00% + 6.50%)^ - CylO j^
-
BMRE Balancing, Modernization, Replacement, Expansion
-
BNBC Bangladesh National Building Code
-
DAP Detailed Area Plan
-
CSR Corporate Social Responsibility
ICAAP - Internal Capital Adequacy Assessment Process
-
HSBC Hong Kong and Shanghai Banking Corporation (opened in 1865)
-
BASIC Bangladesh Small Industries and Commerce Bank
-
RBCA Risk Based Capital Adequacy
RWA - Risk Weighted Assets
-
ECAI External Credit Assessment Institute ( Bangladesh bank recognized 8 companies: 1. Credit Rating Information and services
Ltd . (CRISL, 2. Credit Rating Agency of Bangladesh (CRAB), 3. National Credit Rating Ltd. ( NCRL), 4. Emerging Credit Rating Ltd.
( ECRL), 5. ARGUS Credit Rating Services Ltd . (ACRSL), 6. Alpha Credit Rating Ltd . (ACRL), 7. WASO Credit Rating Company ( BD ) Ltd .
and 8. Bangladesh Rating Agency Ltd. ( BDRAL)
Page 21 of 29
Credit Risk Grading ( CRG ):
Five types of Risks-
Key Parameter Weight
Name of Risk
Leverage Ratio 15%
(Debt Equity Ratio=Total Liabilities to Tangible Net worth)
Liquidity Ratio 15%
(Current Ratio= Current Assets to Current Liabilities)
Financial Risk 50% Profitability Ratio 15%
Operating Profit Margin= ( Operating Profit/Sales) x 100%
Coverage Ratio (Interest Coverage ratio) 5%
Earning before Interest & Tax/Interest on Debt
Size of Business (Annual Sales) 5%
Age of Business 3%
Business/Industry Risk Business Outlook 3%
18% Industry Growth 3%
Market Competition 2%
Entry/Exit Barriers 2%
Experience 5%
Management Risk Second Line/ Succession 4%
12% 3%
Team Work
Security Risk Security Coverage ( Primary) 4%
10% Collateral Coverage 3%
Support (Guarantee) 3%
Account Conduct 5%
Relationship Risk Utilization of Limit 2%
10% Compliance of Covenant/Condition 2%
Personal Deposit 1%
SL # Grading Score
1 Superior Fully cash secured, secured by government
2 Good 85 +
3 Acceptable 75 -84
4 Marginal / Watch list 65 - 74
5 Special Mention 55-64
6 Substandard 45 - 54
7 Doubtful 35 - 44
8 Bad/Loss < 35
Page 22 of 29
1. The term "Credit'' implies:
a ) Only 'Funded' credit
b ) Both ' Funded ' and ' Non -funded ' credit
c) Credit against financial instruments only
2. " Borrowing Power" is described in -
a ) Articles of Association
b) Memorandum of Association
c) Business policy of the company
3. Cost of Goods sold ( CGS) is:
a ) Cost incurred in selling goods.
b ) Cost of Material, labor and overhead for producing goods.
c) Cost of Marketing the goods.
4. Current Ratio is:
a ) The comparison between current & fixed asset.
b ) The comparison between current asset and current liability
c) The comparison between cash and inventory.
5 . Acid - Test Ratio expresses :
a ) More accurate position of current liability.
b ) More accurate position of liquidity.
c) Real solvency of the company.
6 . The concept "present value" has evolved due to :
a ) Time value of money
b ) Effect of inflation
c) Both of the above
7 . Working Capital means:
a ) Capital required for meeting day to day operating expenditure.
b) Capital subscribed by the sponsor of the company.
c) Required capital for installation of machinery.
8 . Net working capital means:
a} Total of Current Asset
b ) Total Current Asset minus total current liability
c) The cash and Bank balance only
9 . Which statement is most appropriate?
a ) Project appraisal is the critical analysis of an investment decision whether it is acceptable or not.
b) Project appraisal is financial feasibility study of a project.
c) Project appraisal is the projection of the future of project.
10 . Internal Rate of Return ( IRR ) is :
a ) The rate that equates total of time adjusted cash inflows with the initial investment
b ) The rate where Net present value ( NPV) is 'zero'.
c) Both of the above .
11. By Break - Even Point ( BEP) analysis we can:
a ) Find out the level of production where both the Revenue & Cost is equal
b ) Decide the price level to earn a particular amount of profit.
c) Both of the above .
12 . An example of non - cash expenditure :
a ) Advertisement cost
b ) Depreciation
c) Interest on loan
13 . Which one is Off- Balance Sheet item?
a ) Lease Finance
b ) Bank Guarantee
c) Depreciation
Page 26 of 29
Loan Documentation
Documentation
Concept
Areas in the whole process of Documentation
Acceptance to the sanction
Charge Documentation
Witnessing
Stamping
Documentation ( continued1
Mortgage Formalities
Deeds & Documents to be obtained essentially
Vetting of Deeds & obtaining Lawyers Opinion
Major Deeds to be executed
Obtaining Lawyers Satisfaction Report
Creation of charges with RJSC
Lien . Right of Set off and Assignment
DOCUMENTATION
Documentation' in relation to credit facility is a comprehensive matter. It is an art of providing shield against risk of non -
repayment of loan . Usually, in real life, as the process of " Documentation " we see the following :
• Obtaining Acceptance to the Sanction .
• Obtaining charge documents.
• Witnessing.
• Stamping.
• Completion of mortgage formalities.
• Creation of Charge with proper authority.
However, "Documentation" should be viewed as a process of ensuring shield against risk of non - repayment of loan
comprehensively in 03 ( three ) dimensions:
i ) The Type of Borrower
ii ) The Type of Loan or credit facilities &
iii) The Type of Security Arrangement
Page 27 of 29
& Security are:
In General, the Papers & Documents to be obtained / maintained irrespective of Type of Borrower, Loan
1. Demand Promissory Note
2. Letter of Authority
3. Letter of Arrangement
4. Letter of Disbursement
5. Letter of Revival
6. Personal Networth statement
7. Copy of National ID
8. Credit Approach in Business Pad of the Borrower
9. Credit Application in prescribed format duly filled in
10. Photograph of the Borrower
11. Up to date CIB Report
12 . Credit report of the Borrower /Supplier
13. Liability Declaration of the borrower along with an Udertaking that they have no liability with any bank
or Financial
institution excepting as declared .
without prior
14 . Undertaking stating that, they will not avail any credit facility from any other bank or financial institution
consent of the bank.
15. Undertaking stating that customer does not have any relationship as Director or Sponsor with the bank.
16. Undertaking stating that customer shall not sell or transfer the ownership of the business / factory /shop until
bank dues are
fully paid or without NOC of the bank.
17. Credit Risk Grading Score Sheet ( CRGS)
18. Un - dated cheque covering the credit facility
19. Acceptance of the Borrower to the Sanction Letter
20. Proper Stamping
Page 29 of 29
Investment Classification, Provisioning, Re-scheduling
& Write-off procedures as per Bangladesh Bank Circulars
Mohammad Maksudul Huq Chowdhury
Assistant Vice President
IA & MIS Division, Exim Bank
Head Office, Dhaka .
Mobile: 01713-361838
Classification of Investment:
[ Related Circulars of Bangladesh Bank ( BB): BRPD Circular no.14 dated 23.09.2012; BRPD Circular no. 19
dated 27.12. 2012; BRPD Circular no.05 dated 29.05.2013; BRPD Circular no. 16 dated 18.11. 2014; BRPD
Circular no. 08 dated 02.08. 2015; BRPD Circular No. 4 dated 29 January 2015; ACFID Circular No. 1 dated 05
March 2013]
What is Classification:
Classification of investment means classify / segregate the same according to its merit ( performing and non-
performing ) in accordance with Bangladesh Bank circular. Adversely classified investments are those
investments where bank is unclear whether it will be able to recoup the investment proceeds from the
customer or not. As per Bangladesh Bank circulars there are following types of classification of Investment:
1. Standard
3. Sub-Standard (SS)
4. Doubtful ( DF)
^
2. Special Mention Account (SMA ) Uncjfssified
Adversely Classified
5. Bad / Loss ( BL)
Categories of investment:
There are 4 types of investment as per BRPD Circular-14 dated 23/ 09/ 2012. They are:
( a) Continuous investment
( b) Demand Investment
( c) Fixed Term Investment
( d) Short Term Agriculture & Micro Investment (STAG & MI ) .
a . Continuous investment:
The Investment Accounts in which transactions may be allowed frequently within certain limit and have an
expiry date for full adjustment will be treated as Continuous Investment Examples are: CC, OD etc
Two key indicators:
1
b . Demand Investment:
The investment which has no specific repayment schedule is known as demand investment . So the
! investment that becomes repayable on demand by the bank will be treated as Demand Investment . If any
contingent or any other liabilities are turned to forced investments ( i .e. without any prior approval as regular
investment ) those too will be treated as Demand Investments . Such as: Forced MPI, MIB, FBP, and IBP etc
Basis of classification:
There are two basis:
a ) Objective Criteria
b) Qualitative Judgment
Rules of Classification:
Defaulted Investment :
According to Section 5 (GaGa ) of The Banking Company Act, 1991 " defaulter borrower"
means investment which remains overdue for 06 (six ) months . As such investment classified
as DF / BL for all categories and as SS for Fixed Term Investment up to Tk .10.00 lac &
Agricultural category will be treated as defaulted investment.
Reporting of Investment:
Summary of all CL : CL - 1
Continuous Investment : CL - 2
Demand Investment : CL - 3
Fixed Term Investment : CL - 4
STAG & Micro Investment : CL - 5
2
Provision:
What it is:
Provision for investment is part of profit set aside to bear the expected losses from non- payment of
investment. Provision is kept against both classified and unclassified investment. The reason for
keeping provision against classified investment is obvious- there are explicit symptoms of non-
payment by customer . What is the reason for keeping provision against unclassified investment?
Historically it is seen that a part of unclassified investment becomes classified at some point of time. So,
to cover that part of expected loss, provision is maintained against unclassified investment.
Types of Provision:
General Provision (provision against STD & SMA): Provision for unclassified investment is kept at
certain percentage on total amount of unclassified investment and it is called general provision .
-
General provision is a component of Tier II capital.
)/. Specific provision ( provision against SS, DF & BL): Provision against classified investment is kept
after analyzing the classified accounts one-by-one and it is called specific provision
Base for provision ( BP):
It implies the amount on which provision is calculated .
a . For UC & SMA Investment- base for provision is: Outstanding amount.
b. For SS, DF & BL Investment- base for provision is calculated by applying the following rules as per
nature of Eligible collateral security :
A. For eligible collaterals of the following types:
1. Deposit with the same bank under lien against the investment
2. Government bond / savings certificate under lien
3. Guarantee given by Government or Bangladesh Bank,
/
^ BP = Outstanding Balance —
B . For all other Eligible collaterals:
Profit Suspense
— Value of eligible Securities
Eligible Collateral :
Eligible Collaterals ' included in determining base for provision is:
-
100 % of deposit under lien against the investment.
-
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 .
\/ y30 % of the market value of easily marketable commodities kept under control of the bank
N/- Maximum 50 % of the market value of ]and and building mortgaged with the bank
-50 ?4 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.
Rate of general provision:
General Provision : ( Applicable for UC and SMA investments!
SME 0.25 %
HF/ Investments to Professional under CF / Brokerage House/ Merchant Banks / Stock Dealers 2%
Consumer Financing 5%
Agriculture 1%
Off balance sheet items 1%
UC all other Investment (other than CF, Brokerage House, Merchant Banks, Stock dealers, SME ) 1%
3
Specific Provision :
SS 20 % on Base for provision
DF 50 % on Base for provision
BL 100 % on Base for provision
For ST Agri and Micro Investment:
SS, DF 5% on Base for provision
BL 100 % on Base for provision
***If any investment rescheduled according to BRPD Circular no. 04/ 2015 dated January 29, 2015 ( Large
Investment Restructuring) provision of that investment will be: Provision applicable for SMA inv + 1% .
Rescheduling of Investment:
[ Related Circulars of Bangladesh Bank ( BB): BRPD Circular no.15 dated 23.09.2012; BRPD Circular no.06
dated 29.05.2013; BRPD Circular No. 5 dated 23 February 2015; ACFID Circular No. 1 dated 23
February 2015 ]
What is Rescheduling:
Rescheduling means fixing up a new' repayment schedule for a defaulted Investment where new Investment
replaces the outstanding balance on an older investment, and is paid over a longer period , usually with a
lower installment amount. Rescheduled Investment also called Restructured Investment / Replacement
Investment. It is also termed as " prolongation" and "evergreening".
Requirement of Rescheduling:
1. Investment commonly rescheduled to accommodate a customer in financial difficulties .
2. To provide a customer with relief when needed due to an economic downturn or other unforeseen
personal event or natural disasters.
3. A default w'ould hurt both the customer and the FIs.
4
Time limit for rescheduling:
a . Continuous Investment:
Frequency SS DF B/L
First 18 months 12 months 12 months
Second 12 months 09 months 09 months
Third 06 months 06 months 06 months
b . Demand Investment:
Frequency SS DF B/L
First 12 months 09 months 09 months
Second 09 month 06 months 06 months
Third 06 months 06 months 06 months
Frequency SS DF B/L
First 36 months 24 months 24 months
Second 24 months 18 months 18 months
Third 12 months 12 months 12 months
Repayment Conditions:
e . If the investment becomes default after third rescheduling, the customer will be treated as a
habitual defaulter and the bank shall not consider for further rescheduling.
f . Any investment classified during Bangladesh Bank's on-site inspection on the basis of
Qualitative Judgment can not be declassified without the consent of Bangladesh Bank.
g. Before rescheduling any Large Investment or Investment Related to the directors of other Bank,
prior approval from Bangladesh Bank to be obtained.
5
Down Payment:
Fixed Term Investment:
1st time ; 15 % of overdue installment or 10 % of total outstanding (which is lower)
2 nd time: 30 % of overdue installment or 20 % of total outstanding (which is lower )
3 rd time ; 50 % of overdue installment or 30 % of total outstanding (which is lower)
b Continuous and Demand Investment:
Amount of Overdue Investment Rate of Down payment
Up to Tk . 1.00 (one) crore 15 %
Above Tk .l .OO(one) crore and up to Tk .5.00 (five) crore 10 % ( but not less than Tk . 15.00 lac)
Above Tk . 5.00(five) crore 5 % ( but not less than Tk .50.00 lac)
**** If any Continuous or Demand Investment is rescheduled for further (first time after being
converted partly or wholly into Term Investment) and the repayment installments are fixed, the
application for rescheduling of such investment shall be like as Fixed Term Investment .
Exceptions:
I. In case of RMG sector, force investments, which are backed up with stock lot, may avail
rescheduling facility without down payment. However, sales / export proceeds from the stock
lot must be used to repay the investment.
l i. In case of fertilizer importer, if investment becomes adversely classified due to delay in
receipt / realization of government subsidies, the investment may be rescheduled without down
payment . However, the receivable government subsidy must be used to repay the investment.
The customer must pay at least 15% of the outstanding balance (outstanding amount
excluding down payment) . If the customer is exporter, new facility may be availed after
paying at least 7.5 % of the outstanding balance (outstanding amount excluding down
payment )
n. Newr Facility from other bank also subject to the condition ( i ) and obtaining NOC from
the rescheduling Bank or FI.
b. Prior approval of Bangladesh Bank shall have to be obtained if the investment is related to the
director of any bank.
c. Number of rescheduling should be mentioned in sanction letter . While reporting to CIB, the
rescheduling investment should be shown as RS-1/ RS-2 / RS-3 and if there exists any kind of profit
waiver, reporting should be RSIW-1/ RSIW-2/ RSIW-3.
6
Write-off :
[ Related Circulars of BB: BRPD Circular no. 02 dated 13.01.2003; BRPD Circular no. 13 dated 07.11.2013]
-
The term " write-off " is an accounting term where write off of investment means removing the long time
outstanding bad investment from the books of accounts by observing some regulation.
Rules of Write-off :
1. BL investment can be w' ritten -off at any time. If classified account remains BL for more than 05 (five)
years and 100 % provision is kept there-against, the account has to be written-off immediately .
2. If provision kept there against is not sufficient, current year income account may be debited for
balance amount. *