No defaulting till December even if loan repayments missed
Banking
Borrowers now have three more months during which they will not be labelled defaulters even if they fail to repay bank loans as the Bangladesh Bank has extended the facility because of the lingering economic fallout of Covid-19.
The central bank, in a circular on Monday, asked banks not to downgrade the classification status of any borrower for defaulted loans between the period of January and December this year.
It also said a borrower will be allowed to pay later the instalments missed during January-December.
Bankers hailed the central bank's decision, saying it would help to revive the economy from the Covid-19 effects.
Syed Mahbubur Rahman, managing director of the Mutual Trust Bank, told The Business Standard that it is obviously a good decision for the overall economic recovery. But borrowers should pay instalments regularly if they have the ability.
"Otherwise, they will have to pay more interests as per the central bank's instruction for delaying the instalments," he warned.
As part of its crisis mitigation strategy, the Bangladesh Bank, on March 19, primarily directed banks to provide this facility to all borrowers for six months – from January 1 to June 30.
On June 15, the facility was extended further to September 30 this year.
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 for borrowers who 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 December, in which they have failed to pay their instalments.
Banks can provide rational rebates to the borrowers who pay regular loan instalments, said the circular.
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