The Bangladesh Bank on Wednesday rejected appeal of a number of business groups for relaxing single borrower exposure limit.
The central bank issued a circular in this regard on the day.
According to the circular, a number of banks have appealed to the Bangladesh Bank to relax maximum limit of single borrower exposure limit in favour of a number of business groups, which contradicted with the BB鈥檚 circular issued on January 16, 2022.
The circular said, 鈥楾he aggregate principal amount of funded and non-funded exposure to a single person/counterparty or a group shall not exceed 25 per cent of the capital at any point of time.鈥�
鈥楾he aggregate principal amount of funded exposure to a single person/counterparty or a group shall not exceed 15 per cent of the capital at any point of time,鈥� it said.
Borrowers who have exceeded this limit were instructed to reduce their loan limit below the prescribed mark by December 31, 2023.
For reducing credit risk, maintaining corporate governance and maintaining the stability of the banking sector by ensuring good practices in lending, the central bank instructed not to exceed the single borrower exposure limit in any way.
Banks were also reminded to adhere to the prescribed instructions in the circular issued on January 16, 2022, regarding large loan disbursements under business groups.