Bangladesh Bank on Wednesday issued a fresh directive outlining who must write off loans, what types of debt qualify, where the rules apply, when notices must be served, why the measure is being taken, and how banks must execute the write-off process as part of an effort to clean up the financial sector.
According to the circular, the central bank said that loan accounts classified as “bad and loss” with little or no chance of recovery must be written off, with older non-performing loans receiving priority. The instruction is aimed at forcing banks to systematically remove long-stagnant assets from their balance sheets.
Bangladesh Bank said institutions must prioritise chronologically older bad and loss loans when initiating write-offs, signalling renewed focus on legacy defaults that have been left unresolved for years.
The circular also made it mandatory for banks to notify borrowers at least 10 working days before writing off their loan accounts, ensuring that the decision is communicated formally and transparently.
The measure, the central bank said, is designed to ensure proper enforcement of earlier directives under BRPD rules and to strengthen discipline in loan classification and recovery processes across the banking sector.
