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DHAKA, Oct 19, 2025 (BSS) – Bangladesh Bank (BB) has issued a new guidelines concerning the write-off and recovery of defaulted loans, aiming to strengthen recovery activities and align domestic practices with international best standards. 

To this end, the central bank today issued a circular instructing all scheduled banks to implement the new rules immediately. 

Under the guidelines, loan accounts are eligible to be written off if they are classified as bad and unprofitable and determined to have low prospects of recovery in the future.

In implementing these new procedures, banks can write off loans classified as bad and unprofitable on a priority basis according to their chronological order.

At the circular, a significant procedural change is the introduction of a mandatory notification period for borrowers.

Banks must now ensure that the borrower is informed of the loan write-off by providing a notice. This notice is required to be provided at least 30 working days before the relevant loan account is written off.

The circular also mentioned that cash incentives may be provided to officers involved specifically in the recovery of written-off loans. These incentives must be administered in accordance with the bank's own internal policy.

Furthermore, if a bank currently does not have a policy regarding cash incentives for the recovery of written-off loans, such a policy should be formulated with the approval of the board of directors.