People who have taken loans from banks are currently enjoying two months interest suspension as they are facing trouble over the coronavirus pandemic, but some 75,000 clients of non-bank financial institutions (NBFIs) are missing out on this facility.
The Bangladesh Bank on May 3 brought great relief to borrowers when it ordered banks to suspend interest on all loans for two months till May.
But the central bank did not extend this facility to NBFIs because they find that non-bank lenders have to rely heavily on interest for their income as they have no other options like commission, charges, and different type of fees that banks charge their customers.
"We provide our customers with support, including extension in repayments and emergency cash credit, on a case-to-case basis, to help them survive the pandemic," said Mominul Islam, managing director of IPDC, a leading non-bank lender.
He agrees with the central bank's decision to allow NBFIs to continue charging interest because they rely solely on interest. But some NBFIs support their clients just as banks do, he said.
"After all we cannot survive without our customers," Mominul, who is also chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA), told The Business Standard.
But small enterprises which are the main borrowers of NBFIs, and have been impacted by the Covid-19 pandemic also need support to face the crisis.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, told The Business Standard, "Borrowers of leasing companies are in more need of support as most of them are small entrepreneurs. Some of them bought trucks and pickup vans by taking lease financing, and now many of them cannot earn because of the nationwide shutdown."
"How will they pay interest in this crisis period when they cannot earn?" the renowned economist asked.
He also said, as the central bank has relieved bank customers of the tension of paying at least two months interest, it could issue the same instruction for the NBFIs.
Julhash Ahmed, a land owner in the capital and also a client of a leasing company, told The Business Standard, "I have to pay regular instalments with previous interest while other land owners – who borrowed from banks – got an interest suspension facility for April and May."
The same way, while credit card holders of banks are enjoying interest suspension facility, credit card holders of financial institutions are paying interest as usual.
A credit card holder of LankaBangla Finance said he has been charged Tk6,000 interest against his previous month's outstanding amount of Tk1.59 lakh. LankaBangla is the only NBFI that has a credit card service.
"I feel very embarrassed after hearing about this discrimination. The Bangladesh Bank has issued the instruction on loan interest of banks only. But, how will I understood that it is not applicable for non-bank finance institutions," the cardholder expressed annoyance.
Earlier on March 24, the central bank instructed the NBFIs not to label any borrower as classified if they fail to pay all types of loans, leases and investments till June 30. Before that the Bangladesh Bank had issued the same instructions for banks.
According to the central bank data, 34 NBFIs have given around Tk 1 lakh crore in loans and leases to their clients. But the 59 banks have given around Tk10 lakh crore loans and advances to their clients.