Interest Waiver / Interest Reduction Circular Summary (Agrani + Bangladesh Bank)

Interest Waiver / Reduction – Structured Summary for Loan Officers

This page explains how waiver/reduction proposals are typically designed and reviewed in Bangladesh banking context. It is written as an educational reference for bankers (especially classified loan recovery and monitoring teams).

⚠️ Disclaimer: This is not an official circular or legal copy. Always verify the latest Agrani Bank PLC circulars and Bangladesh Bank directives before final submission or approval.

Agrani Bank PLC – Internal Practice Summary

✅ When interest waiver/reduction is usually considered +

To improve cash recovery in long overdue classified accounts
To encourage settlement where full penal interest is unrealistic
To close legal suits and reduce litigation cost
To settle accounts under negotiated compromise settlement
To improve bank asset quality through realistic recovery strategy

📌 Key internal conditions usually checked +

Borrower must pay required principal portion first (as per internal policy)
Waiver usually applies to classified period interest (not always regular period)
Approving authority depends on amount, classification, and policy delegation
Proposal must be justified with COF calculation and recovery likelihood
Borrower must provide settlement commitment and acceptable repayment schedule

🧾 Typical waiver proposal file checklist +

Loan liability breakdown: principal + interest + charges
Current classification status and timeline (expiry → SMA → SS/DF/BL)
COF calculation report and waiver justification
Security / collateral valuation and updated legal status
Borrower repayment source and cash flow note (where applicable)
Bank statement / recovery ledger showing actual deposits or recovery record

Bangladesh Bank (BB) – Regulatory Framework Summary

✅ BB policy intent (why BB limits waiver) +

Waiver should not encourage default culture or willful defaulters
Principal recovery must remain priority over interest recovery
Waiver must improve real cash recovery, not only book adjustment
Loan classification and provisioning rules must remain properly followed

📌 What BB expects in waiver/reduction cases +

Proper approval process and board / delegated authority compliance
Supporting documents for loan repayment capacity and recovery plan
Legal compliance, auditability, and transparent recording of waiver decisions
Correct provisioning and reporting treatment (IFRS, impairment principles)

⚠️ Common regulatory risk areas +

Waiver without recovery plan or settlement commitment
Waiver for willful defaulters without proper justification
Incorrect classification date or mismatch with reporting
Provisioning mismatch due to waiver adjustment
Missing documentation for audit trail

Best Practice Checklist (For Staff)

✅ Before recommending waiver or reduction +

Verify expiry date, classification date, and reporting date correctly
Ensure statement CSV is complete (no missing rows/columns)
Check debit interest entries and compute uncharged interest properly
Prepare COF + special interest calculation (diminishing principal method)
Review borrower repayment behavior and realistic recovery possibility
Check latest circular update before final submission

❌ Common mistakes that cause proposal rejection +

Wrong or edited CSV file (column removed, row missing)
Wrong classification date (must be after expiry)
Waiver proposed without minimum recovery requirement
Missing legal status / collateral verification
Not considering provisioning and audit risk

Interest Waiver Circular Summary

Interest Waiver / Reduction – Structured Summary for Loan Officers

Agrani Bank PLC – Internal Practice Summary

Bangladesh Bank (BB) – Regulatory Framework Summary

Best Practice Checklist (For Staff)