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Earlier, banks were allowed to extend credit up to 50 per cent of their capital to the exporters but, the facility was withdrawn in the latest BB circular.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.
Along with Beximco Group, Square Group, Pran Group, PHP Family is contributing immensely to the economic progress of Bangladesh. Beximco Group and Square Group are the top private sector players but companies like PHP Family are coming up. Sufi Mohammed Mizanur Rahman, an ex banker, established PHP Group which was later re-named as PHS Family. PHP Float Glass is a concern of PHP group and is the pioneer of glass industries in the country. Now PHP float glass industry is the largest glass producer. Ample success in Glass sector along with other indusial sector, PHP group is contributing much to the development of the country. PHP float glass industry limited is Chittagong based sister concern of PHP group. Built on 30-acres of land, with a total investment of Tk 300 crore, the PHP Float Glass Industry at Barabkunda of Sitakunda in Chittagong launched its commercial production in 2005.It produces various types of glass according to local demands. It produces clear-glass sheet of 2MM
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