Borrowers will not be labelled defaulters, even if they failed to pay back their bank loans, till September this year – as the Bangladesh Bank has extended the facility considering the lingering economic fallout of Covid-19.
The central bank – in a circular yesterday – asked banks not to downgrade the classification status of any borrowers for defaulted loans between the period of January and September this year.
As part of its crisis mitigation strategy, the Bangladesh Bank, earlier, on March 19 directed banks to provide this facility to all borrowers for six months – from January 1 to June 30.
Bank directors and different trade bodies had been calling for extending the facility till December this year as they believe many borrowers will not be able to repay their loans in the interim.
However, the banks were instructed to upgrade the classification status of loans if any borrowers manage to repay loans regularly.
The facility was offered to keep the impact of the novel coronavirus within a tolerable level of businesses, said the central bank circular.
As per the latest circular, borrowers will get a time extension to repay loans for the months – between January and September – in which they failed to pay their instalments.
Banks are allowed to follow existing rules and regulations in interest calculation though they have been barred from imposing any penalty or additional interest on the loans for the period.
Borrowers can repay loans as it was fixed earlier or can fix alternative options for the adjustment of loans based on the bank-client relationship.
On June 10, the central bank, in its guidelines on a bank-loan interest waiver for the months of April and May, allowed banks to collect the suspended interest of the two months in equal monthly instalments in twelve months starting from July 2020.
The recoverable interest for the two months would be set after deducting the government subsidy amount from the applicable interest from the two months.