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Circulars

Regulatory Relief to Dampen the Effects of Covid-19 Prudential Regulations for Micro Finance Banks

December 01, 2021
8347

The President/CEO
All Microfinance Banks (MFBs)

Dear Sir/Madam,

Regulatory Relief to Dampen the Effects of Covid-19 Prudential Regulations for Micro Finance Banks

Please refer to AC&MFD Circular Letter No. 01, 04 & 07 of 2020; whereby some policy measures were prescribed for MFBs to provide regulatory relief.

2. In order to enable MFBs in extending relief measures to the affected borrowers, the criteria for classification of assets and provisioning requirements shall be relaxed for Deferred and Restructured Portfolio (DRP) as per the following:

Category Determinant (Existing) Determinant (DRP)
Other Assets Especially Mentioned (OAEM) Loans (principal/mark-up) is overdue for 30 days or more but less than 60 days Loans (principal/mark-up) is overdue for 60 days or more but less than 90 days
Substandard Loans (principal/mark-up) is overdue for 60 days or more but less than 90 days Loans (principal/mark-up) is overdue for 90 days or more but less than 120 days
Doubtful Loans (principal/mark-up) is overdue for 90 days or more but less than 180 days Loans (principal/mark-up) is overdue for 120 days or more but less than 210 days
Loss Loans (principal/mark-up) is overdue for 180 days or more Loans (principal/mark-up) is overdue for 210 days or more

Accordingly, outstanding DRP loans will be re-classified as per the above categories on the date of issuance of this circular.

  1. With 30 days increase in OAEM category, unrealized interest / profit / mark-up / service charges on NPLs of DRP shall now be suspended and credited to interest suspense account on the 60th day. Accordingly, interest / profit / mark-up / service charges already suspended will be allowed to be reversed if a loan does not fall under a classified category due to increased time in OAEM category on the date of issuance of this circular.
  2. The above relaxation shall be available for DRP up till March 31, 2022.
  3. All other instructions on the matter shall, however, remain unchanged.

Yours sincerely,

Noor Ahmed
Director