Bad default if the rescheduled loan is not paid for six months

News desk: If any rescheduled loan remains unpaid for 6 months, it should be classified as direct loss. And interest on rescheduled loan without actual realization cannot be charged to income. In all cases the requirement of approval by the Board of Directors has been waived. Besides, if any rescheduled loan defaults on Bangladesh Bank's inspection, that decision will be final. Bangladesh Bank brought amendments to the previous directive amid various discussions and criticisms regarding the issuance of debt rescheduling and restructuring policies with extensive concessions. The Department of Banking Regulation and Policy on Wednesday (August 3) issued circulars clarifying and revising the guidelines on debt rescheduling and restructuring. Before this, Bangladesh Bank issued a circular on July 18 with the possibility of rescheduling a term loan of Tk 500 crore in four installments for 29 years. The central bank said that instructions have been given to leave the issue of rescheduling completely to the banks. As per the instructions, interest kept as deferred interest against the rescheduled loan account and interest charged after rescheduling shall not be transferred to the income sector of the bank without actual realization. Bad or injurious means that classified loans cannot be credited to Reserve Provision Bank's income sector without actual recovery in case of 3rd and 4th rescheduling of classified loans. And the inspection team of Bangladesh Bank will check whether all the conditions of loan rescheduling have been fulfilled or not. The decision reached after verification will be final. Post rescheduling principal and interest shall be paid in equal installments on monthly or quarterly basis. If 6 monthly or 2 quarterly installments are unpaid, the rescheduled loan should be classified as direct bad.