The process of economic development ofBangladeshhas been seriously constrained by the continuing crisis of the accumulation of classified loans. This paper has been prepared for describing the regulatory regime of Southeast Asian countries like Bangladesh, India, Nepal, Pakistan and Sri Lanka and there regulatory measure regarding Loan classification and provisioning. Loan is the prime asset of a bank. So it is essential to know the asset quality of a bank and regulation helps to determine the financial health and efficiency of the banking sector. Besides, a proper loan classification and provisioning system ensures credibility of the financial system that in turn restores trust and confidence in the mind of depositors. Loan classification and provisioning system is also essential for regularizing follow-up, monitoring activities and improving the recovery position. However, the criteria for classifying and provisioning loan portfolios depend on the prudential policies of the central bank. There are several reasons of classified loans in our banking sector. A comparative analysis in this study among Southeast Asian countries shows the regulatory measure and corresponding deviation from international standard. There is huge amount of classified loans in our banking sector. But at present the trend of classified loans has begin to decline. So it is needed to maintain a standard asset quality and so need to follow related prudential regulation. The Bangladesh Bank has also given the guidelines regarding the provisioning system against classified loans through the BCD and BRPD (Banking Regulation and Policy Department) circulation. Due to increasing default risks of loans, the provisioning system has been revised several times.