Borrowers of up to Tk1 lakh of loans will not have to pay interest for April and May according to the Bangladesh Bank guidelines on bank interest waivers for the two months.
However, credit cards and foreign loans will not be covered by the facility, said the guidelines issued on Wednesday.
The central bank will provide the waived amount of interest to respective banks at nine percent – as all banks have been lending in single digits from April 1.
On May 3 and 4, the central bank ordered banks not to acquire interest for April and May until further notice – in an effort to revive the economy badly affected by the novel coronavirus pandemic.
Now the Bangladesh Bank has allowed banks to shift the applicable interest to their earnings, bringing great respite for lenders, as the BB sanction had earlier resulted in adverse impacts on their financial situation.
Under the guidelines, customers, who were granted an up to Tk1 lakh credit facility, would enjoy a full interest waiver for April and May.
The rate of waivers for customers, with credit facilities ranging between Tk1 lakh and Tk10 lakh, will be two percentage points for that two months, when they have to pay the remaining seven percent of the interest.
Customers who have availed credit facilities above Tk10 lakh will enjoy a one percentage point interest waiver. This means they have to pay eight percent interest, the Bangladesh Bank circular said, adding that the admissible amount of interest waiver would be a maximum of Tk12 lakh.
However, banks have been asked to implement the interest waiver after confirmation from the central bank on sanctions of the government-announced subsidy of Tk2,000 crore.
The government will disburse the waived amount among the banks through the central bank.
On the recovery of the remaining interest, the Bangladesh Bank circular said that the interest would be recoverable in equal monthly installments in twelve months – from July 2020.
However, banks have been allowed to settle the remaining interest recovery based on the bank-customer relationship if the loans were supposed to be adjustable before June 2021.
The Bangladesh Bank, in its circular, also barred banks from imposing interest again on the two months' interest until June 30, 2021.
If any bank has already recovered a waiver-worthy interest amount from any customer, it will have to return the amount.
Banks have been asked to file claims with the central bank for waiver- worthy amounts by July 15.