Borrowers have been given until December this year to avoid having their loans classified as defaulted by paying 25-75% of their 2022 installments.
The Bangladesh Bank issued a circular on Wednesday evening extending the loan moratorium facility for all borrowers.
Under the new facility, large industrial borrowers will be allowed to repay their term loans, which were no longer classified as of April 1, in phases – 50% by June, 60% from July to September and 75% from October to December – without default.
The balance of the preferential installments must be repaid in the same installment one year after the end of the loan term.
Islamic banks are also asked to follow the same policy in their investments.
The Central Bank will later issue instructions on the interest/earnings of the preferential loan.
In addition, unclassified term loans disbursed to cottages, micro, small and medium-sized enterprises (CSMMEs) and the agricultural sector cannot be classified if 25% of a loan is from April to June, 30% from July to September and at least 40 % to be paid back. in October-December of this year.
In addition, large industrial, CMSME and agricultural receivables unclassified as of April 1 cannot be classified as default if repaid in 3 installments by December.
According to the circular, the central bank has granted such special relief as borrowers are facing difficulties in repaying their loans due to the recent surge in Covid infections, huge flood damage in the north and north-east of the country and rising prices of various commodities including commodity and transportation costs the international market.
Borrowers did not have to repay a single penny of their loans in 2020 because of Covid. The following year, they were given the option to repay just 15% of their loans in order not to default. The central bank has granted such benefits to businessmen after they recently submitted several applications.
Also, borrowers from flood-hit districts – Sunamganj, Sylhet, Moulvibazar, Habiganj, Netrokona, Kishoreganj, Sherpur, Jamalpur, Rangpur, Lalmonirhat and Kurigram – who have taken out agricultural loans cannot default by paying the installments of April to non-repayable December.
In addition, term loans disbursed to the CMSME sector in these districts can be protected from default if 25% of the installments are paid from April to December this year.
On May 31, companies applied for a further extension of the credit moratorium facility until December this year, saying they had to pay extra money for imports due to rising commodity prices on the world market due to the Russia-Ukraine war.
In response, Bangladesh Bank said it would check the claim against reality. But bankers said such a facility would hurt their sector.
In the wake of the coronavirus outbreak, borrowers enjoyed a full lending moratorium in 2020, meaning banks did not classify anyone as delinquent despite failing to repay the installments.
The following year, borrowers enjoyed the same facility with a 15% repayment rate on all types of loans. The moratorium ended on December 31, 2021.
Businesspeople have called on the central bank to extend the facility several times this year.