Loan repayment deadline extended by six months

Bangladesh Bank has extended the deadline for repayment of loans by six months.

The central bank in a circular said this facility has been extended to all types of loans, including ongoing and term.

With this, repayment of loan instalment due within January 1 to December 31 will not be classified as defaulted if 25 per cent repayment is made by the end of this year.

The remaining 75 per cent will have to be repaid within the next year, and other instalments must be paid in due course.‎

‎The circular, sent to all commercial banks, said BB took the decision to keep economic activities and credit flow in the private sector normal amid the pandemic.

Bangladesh Bank had earlier set a conditional repayment deadline till June 30.‎ At that time, it said that loans cannot be classified as default if 20 per cent of the repayment is made within August 31.

Top business bodies, including the FBCCI, BGMEA, and BKMEA had been requesting BB to extend the deadline for loan repayment.

Recently, they requested not to classify loans until December this year as the economy recovers from the pandemic. They had also urged to reschedule loans.

Non-performing loans in the banking sector rose by Tk 3,899.12 crore in April-June this year despite the central bank’s regulatory forbearance after the coronavirus outbreak.

According to Bangladesh Bank, at the end of June, the defaulted loans stood at Tk 98,164.31 crore or 8.61 per cent of the sector’s total outstanding loans.

Bad loans were at Tk 94,265.19 crore or 8.48 per cent of the total outstanding loans three months earlier. It is apprehended that bad loans will keep soaring as most clients cannot repay due to the pandemic.