Large loan, CIB Report, International Credit Card

Large loan

Large loan/investment refers to any exposure by a bank to a single person/counterparty or a group which is equal to or greater than 10% of the capital of the bank.

Say, a bank has capital amounting to Tk. 2000 crore. If the bank extends loan/investment (funded or non-funded or both) equal to Tk. 200 crore (10% of capital) or above to any single person/counterparty or a group, it will be considered as a large loan/investment.

CIB Report not mandatory? 

CIB Report is not required for short-term agricultural credit/investment amounting to a maximum of Tk. 250,000 for the purpose of crop cultivation only. However, Bank/ FIs must ensure that the credit/investment facility is not given to a defaulter. 

Write-off:

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 written-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.

3.      Approval from Board of Directors to be obtained before write-off.

4.      Suit must have to be filed before write-off in case of exposure more than BDT 50,000.00 (Taka Fifty Thousand).

5.      Separate debt collection unit to be responsible to recover the written-off investment.

6.      Third party may be engaged to expatiate legal issues or to recover the written-off investment.

7.      Separate ledger to be maintained for write-off investment and cumulative balance of write-off amount to be mentioned in Balance Sheet under the head “notes to the accounts”.

8.      Despite of write-off, respective client will treat as “defaulter borrower” till full adjustment and reporting to be made to Credit Information Bureau (CIB) accordingly.

9.      Prior approval from Bangladesh Bank must have to take in case of write-off of investment related to Directors of Financial Institutions.

10.    A statement of write-off investment to be sent to Bangladesh Bank on monthly basis.  specified format.        

  

International Credit Card

Bangladesh Bank has tripled the limit for international online purchases to $300 per transaction to give a boost to credit card users. In May 2013, the BB allowed users of international credit cards for the first time to make overseas online purchases with a limit of spending $100 per transaction.

The central bank enhanced the limit in a circular yesterday and also widened the online purchasing scope to magazine and newspaper subscription. Earlier, the scope was limited only to legitimate purchase of goods and services such as downloadable software and e-books from reputed and reliable sources abroad.

Online payments for such purchases are limited to the available unused annual travel quotas of the international credit card holders plus an additional amount not exceeding $1,000 annually.

The annual travel quota is $5,000 for Saarc countries and Myanmar and $7,000 for non-Saarc countries.