The Bangladesh Bank reduced the single borrower exposure limit to 25 per cent of a bank’s capital from 35 per cent as part of its measures to contain the concentration of loans among a small group of people.
Even though the total limit, including funded and non-funded ones, was reduced to 25 per cent, the funded loan portion was kept unchanged at 15 per cent of a bank’s capital. ‘The aggregate principal amount of funded and non-funded exposure to a single person or counterparty or a group shall not exceed 25 per cent of the capital at any point of time,’ said a BB circular issued.
Besides, the central bank also withdrew the extra non-funded borrowing limit for exporters. Earlier, banks were allowed to extend credit up to 50 per cent of their capital to the exporters but, the facility was withdrawn in the latest BB circular.
As a result, the exporters, like other bank borrowers, would get loans up to 25 per cent of a bank’s capital — 15 per cent funded and 10 per cent non-funded. An official of the central bank said that the new limit would reduce the risks of the banks and create scope for widening the number of loan beneficiaries. The latest circular on single borrower exposure limit also squeezed the large loan issuance scope for the banks.
Under the revised BB policy, banks having less than 3 per cent non-performing loans would be allowed to issue loans highest up to 50 per cent of respective bank’s loans and advances to large-scale borrowers. Earlier, the highest limit was 56 per cent for the banks having NPL up to 5 per cent.
As per the latest BB circular, banks with NPL ranging between 3 and 5 per cent would be allowed to issue 46 per cent large loans against their total loans and advances. The limit would be 42 per cent for the banks having NPL ranging between 5 per cent and 10 per cent, 38 per cent for the banks having NPL ranging between 10 per cent and 15 per cent, 34 per cent for the banks having NPL ranging between 15 per cent and 20 per cent, and 30 per cent for the banks with more than 20 per cent NPL. Earlier, the lowest large loan limit was 40 per cent for the banks holding more than 20 per cent NPL.
The BB in its fresh policy also introduced another clause that barred banks from building large loan portfolios above 400 per cent of their capital irrespective of their total loans and advances portfolio amount. Another official of the central bank said that the observations of the International Monetary Fund and aligning the policy with international standards were among the reasons behind making such revisions. The central bank also narrowed down the list of sectors or entities, which would get exemption from the newly-enforced policy on single borrower exposure limit.
Nasir Group is one of the largest industrial conglomerates in Bangladesh. The industries include industrial glass, tobacco, printing and packages, light engineering, melamine. It is one of the leading industries in glass manufacturing sector of the country. The company started its journey in 1977. Now this group expands in every industrial sectors of Bangladesh like tobacco, melamine, printing and packaging and footwear. Recently it started producing energy saving light bulbs. Nasir group has a great role in socio-economic development of the country. Dominance in Glass Sector Glass is one of the products of Nasir Group of Industry. Nasir group has a vital role to make Bangladesh self-sufficient in glass sector. This company provides a large portion of glasses to meet country’s demand. Nasir group started float glass production in 2005. The company built its glass manufacturing factory in Gazipur at a cost of Tk.300 crore. Nasir Glass now holds more than 40 percent of the total mark...
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