The Bangladesh Bank on Sunday asked the scheduled banks not to offer rescheduling or restructuring facility against post-import financing for more than once after the initial tenure expiry.
The central bank gave the instruction to the banks in its guidelines on Post Import Financing issued on the day.
Against the import of essential commodities, the rescheduling facility against post-import financing can be issued once for 30 days. The rescheduling or restructuring facility can be issued for 60 days against the import of industrial raw materials.
Such proposals on rescheduling or restructuring must be approved by the banks’ board of directors. The banks are also asked to ensure seasonality and nature of trading, among others, as part of the verification of rationality. The BB has also made physical verification and possession of the goods before granting rescheduling and restructuring facilities in favour of the import.
On approval of such a PIF facility, the BB has asked the banks to follow its credit risk management guidelines, international credit risk rating system guidelines along with compliance of specific guidelines on such loan sanction approved by the board of directors of respective banks.
Collateral must be ensured against the issuance of post-import financing to the banks’ customers, the BB guidelines said.
The guidelines have also barred the banks from issuing fresh PIF facilities to any importer if any existing PIF turns overdue. However, the banks are allowed to issue fresh loans to those clients who would not be able to repay PIF on time for incidents beyond their control.
The banks are also barred from issuing PIF for trading between or among companies under the same group of companies having related interest.
The banks will have to operate a separate PIF Monitoring Unit for the recovery and monitoring of PIF so that the compliance of relevant rules and regulations can be ensured.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Banking