PRUDENTIAL REGULATIONS

FOR BANKS


by Bangladesh Bank

Prepared By
Md. Sagar Rana
Assistant Professor
Banking and Insurance
University of Rajshahi
Policy On Loan Classificatio
n And Provisioning
Categories of Loans and Advances
a) Continuous Loan: The loan accounts in which transactions may be
made within certain limit and have an expiry date for full adjustment will
be treated as Continuous Loan. Examples are: Cash Credit, Overdraft, etc.
b) Demand Loan: The loans that become repayable on demand by the
bank will be treated as Demand Loan. If any contingent or any other
liabilities are turned to forced loan (i.e. without any prior approval as
regular loan) those too will be treated as Demand Loan. Such as: Forced
Loan against Imported Merchandise, Payment against Document, Foreign
Bill Purchased, and Inland Bill Purchased, etc.
Categories of Loans and Advances

c) Fixed Term Loan: The loans, which are repayable within a specif ic time
period under a specif ic repayment schedule, will be treated as Fixed Term
Loan.
d) Short-term Agricultural & Micro-Credit: Short-term Agricultural Credit
will include the short-term credits as listed under the Annual Credit
Programme issued by the Agricultural Credit and Financial Inclusion
Department (ACFID) of Bangladesh Bank. Credits in the agricultural sector
repayable within 12 (twelve) months will also be included herein. Short-
term MicroCredit will include any micro-credits not exceeding an amount [
Tk. 50,000 (Tk. Fifty Thousand)] and repayable within 12 (twelve) months,
be those termed in any names such as Non-agricultural credit, Selfreliant
Credit, Weaver's Credit or Bank's individual project credit.
Basis for Loan
Classification
Past Due/Over Due
(i) Any Continuous Loan if not repaid/renewed within the f ixed expiry
date for repayment or after the demand by the bank will be treated
as past due/overdue from the following day of the expiry date.
(ii) Any Demand Loan if not repaid within the f ix ed expiry date for
repayment or after the demand by the bank will be treated as past
due/overdue from the following day of the expiry date.
(iii) In case of any installment(s) or part of installment(s) of a Fixed Term
Loan is not repaid within the f ixed expiry date, the amount of unpaid
installment(s) will be treated as past due/overdue from the following
day of the expiry date.
(iv) The Short-term Agricultural and Micro-Credit if not repaid within the
f ixed expiry date for repayment will be considered past due/overdue
after six months of the expiry date.
(2) All unclassif ie d loans other than Special Mention Account (SMA) will
be treated as Standard.
(3) A Continuous loan, Demand loan or a Term Loan which will remain
overdue for a period of 02 (two) months or more, will be put into th
e "Special Mention Account(SMA)". This will help banks to look at
accounts with potential problems in a focused manner and it will capture
early warning signals for accounts showing f irst sign of weakness. Loans
in the "Special Mention Account (SMA)" will have to be reported to the
Credit Information Bureau (CIB) of Bangladesh Bank.
(4) Loans except Short-term Agricultural & Micro-Credit in the "Special
Mention Account" and “Sub-Standard” will not be treated as defaulted loan
for the purpose of section 27KaKa(3) of the Banking Companies Act, 1991.
However, Fixed Term Loans amounting up to Tk. 10.00 Lacs in the “Sub-
Standard” category will also be treated as defaulted loan for the same
purpose
(5) Any continuous loan will be classified as:
i. ‘Sub-standard’ if it is past due/overdue for 03 (three) months or
beyond but less than 06 (six) months.
ii. ‘Doubtful’ if it is past due/overdue for 06 (six) months or beyond but
less than 09 (nine) months
iii. ‘Bad/Loss’ if it is past due/overdue for 09 (nine) months or beyond.
(6) Any Demand Loan will be classified as:
i. ‘Sub-standard’ if it remains past due/overdue for 03 (three) months
or beyond but not over 06 (six) months from the date of expiry or
claim by the bank or from the date of creation of forced loan.
ii. ‘Doubtful’ if it remains past due/overdue for 06 (six) months or
beyond but not over 09 (nine) months from the date of expiry or claim
by the bank or from the date of creation of forced loan.
iii. ‘Bad/Loss’ if it remains past due/overdue for 09 (nine) months or
beyond from the date of expiry or claim by the bank or from the date
of creation of forced loan
(A) In case of any installment(s) or part of installment(s) of a Fixed Term
Loan amounting upto Tk. 10.00 Lacs is not repaid within the due date, the
amount of unpaid installment(s) will be termed as ‘past due or overdue
installment’. In case of such types of Fixed Term Loans:
i. If the amount of past due installment is equal to or more than the
amount of installment(s) due within 06 (six) months, the entire loan
will be classified as ''Sub-standard''.
ii. If the amount of past due installment is equal to or more than the
amount of installment(s) due within 09 (nine) months, the entire loan
will be classified as ''Doubtful".
iii. If the amount of past due installment is equal to or more than the
amount of installment(s) due within 12 (twelve) months, the entire
loan will be classified as ''Bad/Loss''.
(B) In case of any installment(s) or part of installment(s) of a Fixed Term
Loan amounting more than Tk. 10.00 Lacs is not repaid within the due
date, the amount of unpaid installment(s) will be termed as ‘past due
or overdue installment’. In case of such types of Fixed Term Loans:
i. If the amount of past due installment is equal to or more than the
amount of installment(s) due within 03 (three) months, the entire
loan will be classified as ''Sub-standard''.
ii. If the amount of past due installment is equal to or more than the
amount of installment(s) due within 06 (six) months, the entire loan
will be classified as ''Doubtful".
iii. If the amount of past due installment is equal to or more than the
amount of installment(s) due within 09 (nine) months, the entire
loan will be classified as ''Bad/Loss''.
Explanation: If any Fixed Term Loan is repayable on monthly installment
basis, the amount of installment(s) due within 06 (six) months will be
equal to the sum of 06 monthly installments. Similarly, if the loan is
repayable on quarterly installment basis, the amount of installment(s) due
within 06 (six) months will be equal to the sum of 2 quarterly installments.”

(8) The Short-term Agricultural and Micro-Credit will be considered

irregular if not repaid within the due date as stipulated in the loan
agreement. If the said irregular status continues, the credit will be
classif ied as 'Substandard ' after a period of 12 months, as 'Doubtful' after
a period of 36 months and as 'Bad/Loss' after a period of 60 months from
the stipulated due date as per the loan agreement.
Maintenance of Provision
a) General Provision: Banks will be required to maintain
General Provision in the following way :


1. @ 0.25% against all unclassif ied loans of Small and Medium Enterprise
(SME) as def ined by the SME & Special Programmes Department of
Bangladesh Bank from time to time and @ 1% against all unclassif ie d
loans (other than loans under Consumer Financing, Loans to Brokerage
House, Merchant Banks, Stock dealers etc., Special Mention Account
as well as SME Financing.)
2. @ 5% on the unclassif ie d amount for Consumer Financing whereas it
has to be maintained @ 2% on the unclassif ied amount for (i) Housing
Finance and (ii) Loans for Professionals to set up business under
Consumer Financing Scheme.
3. @ 2% on the unclassif ie d amount for Loans to Brokerage House,
Merchant Banks, Stock dealers, etc.
a) General Provision: Banks will be required to
maintain General Provision in the following way

4. Rate of provision on the outstanding amount of loans kept in the

'Special Mention Account' will be same as the rates stated in (1), (2),
(3) of Section 4.a) which one is applicable. i.e. @ 0.25% against all
unclassif ie d loans of Small and Medium Enterprise (SME), @ 5% on
the unclassif ie d amount for Consumer Financing, @ 2% on the
unclassif ied amount for Housing Finance, Loans for Professionals to
set up business under Consumer Financing Scheme, Loans to
Brokerage House, Merchant Banks, Stock dealers, etc. and @ 1%
against all other unclassified loans26.
5. @1% on the off-balance sheet exposures. (Provision will be on the
total exposure and amount of cash margin or value of eligible
collateral will not be deducted while computing Offbalance sheet
exposure.)
b) Specific Provision:
Banks will maintain provision at the following rates in respect of classified
Continuous, Demand and Fixed Term Loans:
(1) Sub-standard : 20%
(2) Doubtful : 50%
(3) Bad/Loss : 100%

c) Provision for Short-term Agricultural and Micro-Credits:

(1) All credits except 'Bad/Loss' (i.e. 'Doubtful', 'Sub-standard', irregular

and regular credit accounts) : 5%
(2) 'Bad/Loss' : 100%
Policy On Single Borrower Exposure
Exposure Limits

a) Single Person/Counterparty or Group:

i) The outstanding amount of exposure, both funded and non-funded, to
a single person/counterparty or a group shall not exceed 35% of the
capital at any point of time.
ii) The aggregate outstanding principal amount of funded exposures
shall not exceed 15% of the capital at any point of time.
iii) In case of export financing, the outstanding amount of exposure, both
f u n d e d a n d n on - f u n d e d , a t a n y p oi n t of t i m e t o a s i n g l e
person/counterparty or a group shall not exceed 50% of the capital.
However, the aggregate outstanding principal amount of funded
exposures shall not exceed 15% of the capital at any point of time.
b) Large Loan:
i) Large loan refers to any exposure to a single person/counterparty or a
group which is equal to or greater than 10% of the capital.
ii) The banks may sanction large loans as per the following limits set
against their respective classified loans:
 Prudential Norms
a) Banks shall collect the loan information on their borrowers from Credit
Information Bureau (CIB) of Bangladesh Bank before sanctioning,
renewing or rescheduling loans in order to ensure that credit facilities are
not being provided to defaulters.
b) Banks must assess credit risk by adopting Credit Risk Grading (CRG)
before sanctioning or renewing large loans. If the rating of a CRG turns out
to be "Marginal", banks shall not sanction the large loan, but it can
consider renewal of an existing large loan taking into account other
favorable conditions and factors. However, if the result of a CRG is
“Special Mention Account (SMA)”, neither sanction nor renewal of large
loans can be considered.
c) While sanctioning or renewing of large loans, banks should assess their
borrower's overall debt repayment capacity by taking into consideration
the borrower's liabilities with other banks and financial institutions.
d) Banks shall examine their borrower's Cash Flow Statement, Audited
Balance Sheet, Income Statement and other financial statements to make
sure that their borrower has the ability to repay the loan.
e) Sanctioning, renewing or rescheduling of large loans shall be approved
by the Board of Directors in case of local banks. Such decisions will be
taken by the Chief Executive in case of foreign banks. However, while
approving proposals of large loans, among other things, compliance with
this circular must be ensured.
f) When two or more banks collectively provide credit to a borrower under
a common loan facility (e.g. a syndicated loan), the loan limits in
Paragraph 2(a) apply only to the funds provided by each bank and
represent that bank’s pro rata share of the total loan.
g) The group of counterparties poses a “single risk”, akin to that of a single
counterparty. Such a group is referred to as a group of connected
counterparties. Banks shall evaluate the relationship amongst clients, with
reference to Paragraph (1.e.i.) and Paragraph (1.e.ii), in order to assess
the existence and the extent of a single risk.
h) If an exposure becomes ‘non-conforming’ for any reason as mentioned
in Paragraph-1(c) the Chief Executive of banks are required to act
promptly to bring the exposure into compliance unless doing so would be
inconsistent with prudent banking practices and adversely affect the
ultimate recovery of the exposure. Such non-conforming exposures may
be renewed, have their maturity extended or be restructured without
violating this circular provided –
i) there is no increase in the amount of the exposure, either direct or indirect;
ii) security collateral, if any, shall not be released;
iii) there is no change in the borrower with the exception of changes resulting
from a merger of the borrower with another person;
iv) the renewal, extension or reschedule is not otherwise designed to avoid the
requirements of existing policies, rules & regulations as determined by
Bangladesh Bank;
v) Banks shall report such exposure, if any, to the Department of Off-site
Supervision of Bangladesh Bank.
Policy For Rescheduling Of Loans
Guidelines For Considering Application For Loan
Rescheduling

a) The bank must have a policy approved by its Board of Directors in

place that def ines the circumstances and conditions under which a loan
may be rescheduled, consistent with this circular.
b) When a borrower asks for rescheduling of loan, the bank shall
meticulously examine the causes as to why the loan has become non-
performing. If it is detected from such review that the borrower has
diverted funds elsewhere or the borrower is a habitual loan defaulter,
the bank shall not consider the application for loan rescheduling and
shall take/continue all legal steps for recovery of the loans.
c) If a borrower while applying for rescheduling, pays the required down
payment in cash at a time, the bank must address the application
within 03 (three) months upon receipt.
d) Banks while considering loan rescheduling, must consider overall
repayment capability of the borrower taking into account the borrower's
liability position with other banks and financial institutions.
e) Banks shall review the borrower's cash flow statement, audited balance
sheet, income statement and other financial statements in order to ensure
whe t he r t he bor rowe r woul d be a bl e t o re pay t he re sche dul e d
installments/existing liability or not.
f) If required, bank officers shall conduct spot inspections of the borrower's
company/business place to ensure that the concerned company/business
enterprise would be able to generate a surplus to repay the liability of
rescheduling.
h) Rescheduling of any loan must be justif ied in written statement by the
bank's Credit Committee. The statement must give reasons why the
rescheduling is benef icial to the long-run prof itability and capital adequacy
of the bank, including the factors that cause the Credit Committee to
believe that the loan will ultimately be repaid in full.
 Time Limit For Rescheduling
The rescheduling shall be for a minimum reasonable period of time. Time
limit for rescheduling of different categories of loans will be as follows:
Time limit for rescheduling Continuous
Loan
Time limit for rescheduling Demand
Loan
Time limit for rescheduling Fixed Term
Loan
Time limit for rescheduling for Short-
term Agricultural and Micro-Credit
Down Payment Of Term Loans
a) Application for f irst time rescheduling will be taken into consideration
upon receiving cash payment of at least 15% of the overdue installments
or 10% of the total outstanding amount of loan, whichever is less;
b) Application for second time rescheduling will be considered upon
receiving cash payment of minimum 30% of the overdue installments or
20% of the total outstanding amount of loan, whichever is less.
c) Application for rescheduling third time will be considered upon receiving
cash payment of minimum 50% of the overdue installments or 30% of the
total outstanding amount of loan, whichever is less.
d) The rate of down payments for Short-term Agricultural and Micro-Credit
will be same as above
Down Payment Of Demand And
Continuous Loan
a) If a Demand or Continuous Loan is converted into a Term loan, f ir st
rescheduling may take place against down payment on the basis of loan
amount in the following manner.

b) If any Continuous or Demand Loan is rescheduled for the second time

(f irst time after being converted partly or wholly into Term Loan) and the
repayment installments are f ixed, the application for rescheduling of such
loans shall be considered upon receiving cash payment of minimum 30%
of the overdue installments or 20% of the total outstanding amount of
loan, whichever is less.
Policy For Loan Write off
Writing off bad loans having adequate provision is an internationally
accepted normal phenomenon in banking business. Owing to the
reluctance of banks in Bangladesh in resorting to this system their
balance sheets are becoming unnecessarily and artif icially inf lated. In this
context the following policies for writing off loans are being issued for
compliance by banks:
Banks may, at any time, write off loans classif ied as bad/loss for which
100% provisions have been kept and cases have been f iled in the court
of law. However, banks may write-off default loans below Tk 50,000
without f il ing suit against the borrowers.32. Under the process the
oldest bad/loss classif ie d loans should be considered f irst for written
off.
Banks may write off loans by debit to their current year's income
account where 100% provision kept is not found adequate for writing
off such loans.
All out efforts should be continued for realizing written off loans. Cases must be
f iled in the court of law before writing off any loan for which no legal action has
been initiated earlier.
A separate "Debt Collection Unit" should be set up in the bank for recovery of
written off loans.
In order to accelerate the settlement of law suits f iled against the written off
loans or to realize the receivable written off loans any agency outside the bank
can be engaged. A separate ledger must be maintained for written off loans and
in the Annual Report/Balance Sheet of banks there must be a separate "notes to
the accounts" containing amount of cumulative and current year's loan written
off.
Inspite of writing off the loans the concerned borrower shall be identif ie d as
defaulter as usual. Like other loans and advances, the writing off loans and
advance s shall be re porte d to the Cre dit Information Bure au (CIB) of
Bangladesh Bank.
Prior approval of Bangladesh Bank shall have to obtained in case of writing off
loans sanctioned to the director or ex-director of the bank or loans sanctioned
during the tenure of his directorship in the bank to the enterprise in which the
concerned director has interest (as per explanation contained in section 27(2) of
the Bank Company Act, 1991).
 CORPORATE
GOVERNANCE IN BANK
MANAGEMENT
Appointment of New directors
Every banking company, other than specialized banks, at the time of taking
prior approval from Bangladesh Bank for appointing/reappointing directors
should furnish the following documents along with the application:

a) Personal information of the nominated person;

b) Nominated person’s declaration;

c) ‘Declaration for confidentiality’ by the nominated person;

d) In case of Independent director, the approval letter from Security and
Exchange commission;

e) In case of Independent director, a declaration of the directors concern;

f) CIB report of the nominated person;

g) Updated list of the directors.

RESPONSIBILITIES AND AUTHORITIES OF
BOARD OF DIRECTORS
1. Work-planning and strategic management:
i. The board shall determine the objectives and goals and to this end shall
chalk out strategies and work-plans on annual basis. It shall specially
engage itself in the affairs of making strategies consistent with the
de t e r m i ne d obj e ct i v e s a nd goa l s a nd i n t h e i ssu e s r e l a t i ng t o

structural change and reformation for enhancement of institutional
efficiency and other relevant policy matters.
ii. The board shall have its analytical review incorporated in the Annual
Report as regards to the success/failure in achieving the business and
other targets as set out in its annual work-plan and shall apprise the
shareholders of its opinions/ recommendations on future plans and

strategies. It shall set the Key Performance Indicators (KPIs) for the CEO &
of ficers immediate two tiers below the CEO, and have it evaluated from
time to time.
2. Credit and risk management:
i. The policies, strategies, procedures etc. in respect of appraisal of
loan/investment proposal, sanction, disbursement, recovery, reschedule
and write-off thereof shall be made with the board's approval under the
purview of the existing laws, rules and regulations.
ii. The board shall frame policies for risk management and get them
complied with and shall monitor the compliance at quarterly rests and
review the concerned report of the risk management team and shall
compile in the minutes of the board meeting.
3. Internal control management:
The board shall be vigilant on the internal control system of the bank in
order to attain and maintain satisfactory qualitative standard of its
loan/investment portfolio. The board will establish such an internal control
s y s t e m s o t h a t t h e i n t e r n a l a u d i t p r o c e s s c a n b e c o n d u c t e d

independently from the management. It shall review the reports submitted
by its audit committee at quar terly rests regarding compliance of
recommendations made in internal and external audit reports and the
Bangladesh Bank inspection reports.
4. Human resources management and development:
i. Policies relating to recruitment, promotion, transfer, disciplinary and
punitive measures, human resources development etc. and service rules
shall be framed and approved by the board. The chairman or the directors
s h a l l i n n o w a y i n v o l v e t h e m s e l v e s o r i n t e r f e r e i n t o o r

inf luence over any administrative affairs including recruitment, promotion,
transfer and disciplinary measures as executed under the set service rules.
ii. The board shall focus its special attention to the development of skills of
bank's staff in different f ie lds of its business activities including prudent
appraisal of loan/investment proposals, and to the adoption of modern
e l e c t r o n i c a n d i n f o r m a t i o n t e c h n o l o g i e s a n d t h e

introduction of effective Management Information System (MIS).
iii. The board will compose Code of Ethics for every tier and they will follow
it properly. The board will promote healthy code of conducts for developing
a compliance culture.
5. Financial management:
i. The annual budget and the statutory f in ancial statements shall be
f in alized with the approval of the board. It shall at quar terly rests
review/monitor the positions in respect of bank's income, expenditure,
l i q u i d i t y, n o n - p e r f o r m i n g a s s e t , c a p i t a l b a s e a n d a d e q u a c y,

maintenance of loan loss provision and steps taken for recovery of
defaulted loans including legal measures.
ii. The board shall frame the policies and procedures for bank's purchase
and procurement activities and shall accordingly approve the distribution of
power for making such expenditures. The maximum possible delegation of
such power of expenditures shall rest on the CEO and his subordinates. The
d e c i s i o n o n m a t t e r s r e l a t i n g t o i n f r a s t r u c t u r e d e v e l o p m e n t

and purchase of land, building, vehicles etc. for the purpose of bank's
business shall, however, be adopted with the approval of the board.
iii. The board will review whether an Asset-Liability Committee (ALCO) has
been formed and it is working according to Bangladesh Bank guidelines.
6. Appointment of Chief Executive Officer (CEO):
In order to strengthen the financial base of the bank and obtain confidence
of the depositors, one of the major responsibilities of the board of
d i r e c t o r s i s t o a p p o i n t a n h o n e s t , e f fic i e n t ,

experienced and suitable CEO or Managing Director. The Board of directors
will appoint a suitable CEO with the approval of the Bangladesh Bank.
7. Other responsibilities of the Board:
The board should follow and comply with the responsibilities assigned by
Bangladesh Bank.
8. Meeting of Board:
Board of directors may meet once or more than once in a month if
necessary. But Board of directors shall meet at least once in every three
months. Excessive meetings are discouraged.
 INTEREST RATES ON
DEPOSIT AND LENDING
The key features of interest rate on deposit and lending are as follows:
Banks must submit returns on rate of interest on deposit and lending to
Bangladesh Bank within 7 days of the respective month.
Banks are allowed to change their deposit and lending interest rate only
once in a month and that has to be uploaded on their respective
websites along with informing Bangladesh Bank.
In case of Fixed Term Loan and Continuous Loan, interest will be
calculated on the basis of the product of the day end balance but
interest must be charged on quarterly basis.
Banks are allowed to charge penal interest.
The loan accounts under the Prudential Guidelines for Consumer
Financing and Small Enterprise Financing will be repaid according to
Equal Monthly Installment (EMI) method.
Banks have been advised not to pay/charge any interest beyond their
announced rate of interest on deposit and lending as per existing
interest rate policy.
No additional charges shall be collected along with the rate of
interest/profit on loans other than the announced Schedule of Charges.
Banks are allowed to differentiate interest rate up to a maximum of 3%
considering comparative risk elements involved among borrowers in
same lending category.
In case s whe re t he m axim um int e re st rat e has be e n f ix e d by
Bangladesh Bank, Banks shall report their own maximum cap. Banks
have also been advised to upload their deposit and lending interest rate
on their respective website and display the same in all of their head
offices and branches where it can be easily visible.
 BANK DEPOSIT
INSURANCE SCHEME
01. Short title. - This Act may be called the Bank Deposit Insurance Act 2000
02. Def initions. - In this Act, unless there is anything repugnant in the subject or
context –
'Deposit' means in case of any scheduled bank, the summation of unpaid residue of
its depositors‘ accounts;
'Trustee Board' means the Trustee Board of the fund as mentioned under Section 8
hereof;
'Scheduled Bank' means the Scheduled Bank as def ined under Article 2(j) of the
Bangladesh Bank Order, 1972 (P.O.No.127 of 1972);
' F u n d ' m e a n s t h e T r u s t F u n d a s p r e s e r v e d u n d e r S e c t i o n 3 h e r e o f ;

'Auditor' means chartered accountant as def in ed under Article 2(1)(b) of the
Chartered Accountants Order, 1973 (P.O.No.2 of 1973);
'Premium' means premium payable by the insured bank as specif ie d under Section
5 hereof;
'Bangladesh Bank' means Bangladesh Bank established under Bangladesh Bank
Order, 1972(P.O.No.127 of 1972);
'Insurance' means deposit insurance;
'Insured Bank' means bank insured under this Act.
03. Deposit Insurance Trust Fund.-
(1) Bangladesh Bank shall maintain a Fund in the name of Deposit
Insurance Trust Fund and monies of the Fund can be invested by
Bangladesh Bank in any approved sector.
(2) The following monies will be deposited in the Fund namely: -Money
received from insured bank;
(a) Return on investment of monies of the Fund; Money received from
the bank liquidated under Section 7 hereof;
(b) Income received from other sources.
(3) The Fund shall not be spent for any purposes other than for
repayment of dues of the depositors of the bank liquidated under the
provision of Section 7 hereof and for the cost of maintenance of the Fund;
(4) Nothing of Income Tax Ordinance 1984 (XXXVI of 1984) shall apply to
the income of the Fund.
04. Insured Bank. - Notwithstanding anything contained in any other law for
the time being in force,
(a) All scheduled banks existing on the date of enforcement of this Act shall
be deemed to have been insured with the Fund from the same date; and
(b) All scheduled banks to be established after enforcement of this Act, shall
be insured with the Fund.
05. Premium of the Insured Bank. –
(1) Each insured bank shall pay the premium to the Fund @ 0.07% per annum
on such portion of its deposit as may be determined by Bangladesh Bank from
time to time. But provided that, Bangladesh Bank, with the prior approval
(previous sanction) of the Government, shall have the power to increase or
decrease the rate or premium.
(2) Insured bank shall pay its premium from its expenditure account.
(3) Premium shall have to be paid at such time and mode as specif ie d by
Bangladesh Bank.
(4) If any insured bank fails to pay its premium, Bangladesh Bank shall have
the power to direct as to the deposit of such premium to the Fund by debiting
the amount equal to that of the premium from the account of the said bank
maintained with Bangladesh Bank
06. Action against failure for more than once in payment of premium .-
If any insured bank fails for more than once to pay the premium,
Bangladesh Bank, allowing the chance of hearing and by notif ication in the
Of fic ial Gazette, shall have the power to direct as to refraining any

insured bank from accepting deposit for the time as specif ie d in the
notification .
08. Trustee Board.- There shall be a Trustee Board for operation and
administration of the Fund and the Board of Directors of Bangladesh Bank
shall be the Trustee Board of the Fund .
09. Annual Report. - The Trustee Board shall submit to the Government the
copy of annual accounts of the Fund certif ied by the Auditor and signed by
the Governor of Bangladesh Bank and the Report on activities within 2(two)
months from the date of preparation of such accounts.
10. Repeals and Savings. –
(1) The Bank Deposit Insurance Ordinance, 1984 (LIII of 1984) is hereby
repealed.
(2) All monies of the Deposit Insurance Fund preserved under the repealed
Ordinance shall be transferred to the Fund.
07. Liability of the Fund.-
(1) If the order is passed for liquidation of any insured bank, Bangladesh Bank shall
pay each of its depositors the amount equal to one's deposit, not exceeding
maximum Tk. 01 (one) lac, from the Fund.
(2) If any depositor has more than one account in the liquidated bank and the
balances of the accounts altogether even if stand more than Tk. 01 (one) lac, he shall
not be paid back more than Tk. 01 (one) lac. The Of ficial Liquidator against the net
asset of the liquidated bank shall adjust such payment with the amount payable to
the depositors.
(3) The Of ficial Liquidator, whatever he might be termed, within less than 90 days
after assuming his of fice, shall submit to Bangladesh Bank the list of deposits of the
depositors in the form as specified by Bangladesh Bank.
(4) The Trustee Board shall arrange for payment from the Fund the amounts due to
the depositors in terms of the provisions of Sub-section (1) within less than 90 days
after receipt of the list as specified under Sub-section (3) hereof .
(5) If the amount of the deposited monies of the Fund falls short of the payable
amount, Government shall, through Bangladesh Bank lend the Fund the amount of
short-fall at Bank Rate-based interest.
(6) Notwithstanding anything contained in this Section, the amount payable to any
depositor shall be determined net of any claims of the insured bank legally due to it.