Banks directed to maintain 5pc provisioning for SMA
Star Business Report
Bangladesh Bank (BB) in a circular yesterday directed all the banks to maintain five percent provisioning for the Special Mention Account (SMA) to bring more discipline in loan disbursement and recovery systems.In last February, the BB introduced the SMA in classifying the default loans and decided that any loan, if not recovered in 90 days, would be declared as the SMA. Earlier, there were three categories of classified loans -- bad, doubtful and sub-standard. The BB has the provision to maintain hundred percent provisioning for bad loans, 50 percent for doubtful and 20 percent for sub-standard loans. Only interest will be suspended in the SMA with no provisioning in BB's February direction.
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