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The Bangladesh Bank has instructed all scheduled banks to begin the renewal process for continuous loans at least two months before their expiry, aiming to ensure uninterrupted business and trade activities amid the current economic challenges.

The directive was issued on Tuesday through BRPD Circular No. 05.

Under the new guidelines, banks must proactively initiate renewal procedures — including receiving client applications and required documents — no later than two months prior to a loan’s scheduled expiry date.

The move builds on earlier definitions of continuous loans and past-due or overdue status set out in a November 27, 2024 circular.

Renewal Allowed Before NPL Classification

Acknowledging that delays may occur due to factors beyond the control of banks or borrowers, the central bank has allowed loans to be renewed up until they are classified as non-performing loans (NPLs).

However, banks must maintain documented explanations if renewal is not completed within the original tenure, ensuring accountability and regulatory compliance.

Strict Rules on Excess Limits

The circular also tightens credit discipline. Continuous loans can only be renewed if any amount exceeding the sanctioned limit is fully adjusted. If excess exposure is not regularised, the entire loan must be adjusted.

The central bank has strictly prohibited transferring excess loan amounts into new or other accounts to bypass adjustment requirements.

Issued under Section 45 of the Bank Company Act, 1991, the directive replaces earlier instructions circulated under BRPD Circular No. 06/2025.

The order takes immediate effect and will remain valid until December 31, 2027.