Banking Regulation & Policy Department Bangladesh Bank Head Office Dhaka

BRPD Circular No.07

Date:-03 November, 2004 19 Kartik, 1411

Chief Executive All Scheduled Banks in Bangladesh

BRPD Circular No.07

Dear Sir,

Prudential Guidelines for Consumer Financing and Small Enterprise Financing.

You are aware that Bangladesh Bank had earlier formed focus groups with the participation of commercial banks for preparation of guidelines on " Managing Core Risks in Banking." These groups had successfully completed their tasks and the manuals/guidelines prepared by the groups were sent to you for implementation. Encouraged by the success of the previous focus groups Bangladesh Bank decided to form another two focus groups for preparation of Prudential Regulations/Guidelines for two important areas of financing viz. Small Enterprise Financing and Consumer Financing. These two focus groups have produced documents which are being forwarded herewith in CD-ROM. These documents contain the minimum set of Prudential Regulations which must be followed by the banks desirous to provide lending facilities to these two sectors. These documents also contain the Developmental Guidelines which banks may like to follow in order to establish an efficient business unit and manage its inherent risks successfully. Banks can also develop more sophisticated procedures of lending based on these guidelines. Banks are, therefore, advised to implement the Prudential Regulations/Guidelines by 31st December,2004 and submit a compliance report to the effect that the Regulations/Guidelines have been put in practice to this Department by January 15,2005. Besides, Bangladesh Bank will also monitor the progress of implementation of these Regulations/Guidelines through its on site inspection teams during routine inspection. Please acknowledge receipt

Yours faithfully, (Md. Jahangir Alam) Deputy General Manager Phone: 7125844