Borrowers have been given time till December this year to avoid their loans being classified as defaulted by paying 25-75% of their instalments for 2022.
The Bangladesh Bank issued a circular on Wednesday night, extending the loan moratorium facility for all borrowers.
Under the new facility, large industrial borrowers are allowed to repay their term loans, which became unclassified on 1 April, in phases – 50% by June, 60% in July-September, and 75% from October to December – without becoming a defaulter.
The remaining amount of the benefited instalments will have to be repaid in the same instalment of one year after the expiry of the loan period.
Islamic banks are also asked to follow the same policy in their investments.
The central bank will later issue instructions on the interest/profit of the beneficiary loan.
In addition, unclassified term loans disbursed to cottage, micro, small and medium enterprises (CMSMEs) and agricultural sector cannot be classified if 25% of a loan is repaid from April to June, 30% in July-September, and at least 40% in October-December of this year.
Besides, the demand loans of large-scale industry, CMSME and agriculture sectors, which became unclassified as of 1 April, cannot be shown as default if those are repaid in 3 instalments by December.
According to the circular, the central bank has given such special facilities as borrowers are facing difficulties in repaying their loans due to the recent rise of Covid infections, huge flood damage in the north and northeast parts of the country, and rising prices of various commodities including raw materials and transportation costs in the international market.
Borrowers did not have to repay a single penny of their loans in 2020 due to Covid. The following year, they were given the chance to repay only 15% of their loans to avoid becoming defaulters. The central bank has given such benefits to businessmen following their several applications recently.
Besides, borrowers from the flood-hit districts – Sunamganj, Sylhet, Moulvibazar, Habiganj, Netrakona, Kishoreganj, Sherpur, Jamalpur, Rangpur, Lalmonirhat and Kurigram – who took agricultural loans, cannot be made defaulter if they fail to repay instalments from April to December.
In addition, term loans, disbursed to the CMSME sector in these districts, can be saved from being defaulted if 25% of the instalments are paid from April to December this year.
On 31 May, businesses sought another extension to the loan moratorium facility until December this year as, they said, they had to pay extra money for imports in the wake of rising commodity prices in the world market due to the Russia-Ukraine war.
In response, the Bangladesh Bank said it would consider the demand against the reality. But bankers said such a facility will be harmful to their sector.
Following the coronavirus outbreak, borrowers enjoyed a complete loan moratorium facility in 2020, meaning banks did not show anyone defaulters despite their failure to repay instalments.
The following year borrowers enjoyed the same facility with a repayment of 15% in all types of loans. The moratorium ended on 31 December 2021.
Businesspeople requested the central bank several times this year to extend the facility.