Loan repayment moratorium extended to 31 Dec
Such loans would not be considered as classified, if borrowers would repay 25 % of their instalments within this period
The Bangladesh Bank has extended the ongoing moratorium on the repayment of loan instalments to 31 December this year in response to a request from businesspeople.
The borrowers would get four more months to repay instalments of all types of loans, including continuous and term loans, said a circular issued by the central bank's Banking Regulation and Policy Department on Thursday.
But, the central bank has increased the amount of minimum instalment to 25% from the existing 20%.
The circular says such loans will not be considered classified if borrowers repay 25% of their instalments within 31 December. In that case, loan recipients have to repay the remaining loan instalments within the next one year.
Officials at the central bank say the second wave of Covid-19 has badly affected the country's trade and commerce. The Bangladesh Bank has extended the deadline for repaying the loans in response to a request from businesses.
Interest or profit against loans or investment under the moratorium will be treated as paid.
Bangladesh Bank officials said instructions will be issued later on the transfer of interest on the loans to the income sector and keeping provisions against loans.
Due to Covid-19, loan classification was suspended, saving clients from being defaulters. This year the facility has been given on a bank-client relation basis.
As the second wave of Covid hit this year, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) recently wrote a letter to the central bank governor demanding an extension of the deadline to December this year.
The Chattogram chamber also sent a letter to the governor voicing the same demand.
However, despite the benefit of non-payment of loan instalments, the amount of defaulted loans has not decreased.
On the contrary, default loans stood at Tk99,205 crore at the end of June this year, an increase by Tk5,000 crore from that of March this year.
The defaulted amount is 8.14% of the total loans disbursed.