The Bangladesh Bank has introduced a fresh loan moratorium facility for borrowers amid the ongoing volatility in the global and local economy.
Under the facility, borrowers will not be listed as defaulters if they can pay 50 per cent instalments of their unclassified term loans - short-term agriculture loans and small loans - payable during April to June of this year, the central bank said in a circular on Tuesday.
However, the remaining 50 per cent instalments will have to be repaid within the next three months. Banks have been authorised to list anyone who fails in repaying the loans within the extended deadline as defaulters.
According to the Bangladesh Bank notice, banks would not be able to impose any penalty interest on the 50 per cent loans that would be unpaid during April to June of this year.
Banks can transfer the interest income of the loans that under moratorium facility to income accounts.
The banking regulator in 2020 introduced the loans moratorium facility for the first time when the Covid-19 pandemic hit the country.
The facility was later extended several times and finally it ended in December of 2022.
A senior official of the central bank said the regulator is now reintroducing the facility as the price of raw materials d in the international market and transport cost has increased due to the prolonged Russia-Ukraine war.
Meanwhile, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), apex trade body in the country, has repeatedly urged the central bank to extend the facility as the country’s economy is facing various challenges due to the crisis in the global economy.
However, economists point out that extending the facility has led to a sharp increase in the country’s non-performing loans (NPLs).
At the end of March this year, the amount of NPLs stood at Tk 1,31,620 crore or 8.80 per cent of the total disbursed loans, marking a significant 16.02 per cent increase year-on-year (YoY), according to the latest Bangladesh Bank data.
March’s figure is the second highest since Bangladesh achieved independence in 1971. The NPLs in the September quarter of last year had hit an all-time high at Tk 1,34,396 crore.
