Bangladesh Bank has come up with a bundle of packages, including a six-month moratorium on loan repayments, in a bid to protect the economy from the shock of the coronavirus fallout.
The central bank on Thursday issued a circular asking all scheduled banks not to classify any loan till June 30, even if a borrower fails to repay banks.
"We assume that borrowers will not be able to repay banks on time because of negative impacts of coronavirus on export and import and the overall economy as well," BB said.
A moratorium period is a time during the loan term when a borrower doesn't need to make any repayment. In other words, it is a waiting period before repayment begins.
In another circular, the central bank has relaxed foreign exchange regulations for trade transactions and extended the facilities as well to help businesses offset the impacts of the pandemic.
Now a bank may allow exporters to extend the tenure of realisation of export proceeds up to 60 days, as additional time from specified period of four months from the date of shipment, for bona fide grounds.
A bank may also allow importers to extend the tenure of submission of bill of entry up to 60 days, as additional time from specified period of four months from the date of payments.
Usance period of back to back LCs opened under supplier or buyer's credit can be extended on banker-customer relationship within the admissible rate of interest up to 180 days, as additional time from present permissible limit of 180 days, to settle the payments.
The central bank will also consider applications for extension of export development fund (EDF) loans up to 180 days from prevailing extendable tenure of 90 days, to settle the payments against such loans for bonafide grounds.
According to the circular, a bank may allow exporters to repatriate export bills at up to 10 percent discounted price of free on board.
All these facilities shall be applicable till September 30 this year. Yet, exporters think the measures would not work as they are facing cancellation and withholding of orders.
"We are in total uncertainty. Now the problem is with the demand side as buyers in Europe and America have stopped buying any clothes," said a frustrated exporter.
Bankers have, however, expressed mixed reaction on the BB move.
"Garments have already been impacted badly and they need support," said Rahel Ahmed, managing director of Prime Bank. At the same time, he also feared that some people could abuse the facilities. Managing director of a large private bank said deferring everything is not good for the banking sector.
"After the circular a big business group told me today (Thursday) that he will not pay instalments now," he told The Business Standard requesting not to be named.