NBFI defaulters get one-time exit facility

The Bangladesh Bank on Tuesday offered a one-time exit facility to defaulters of Non-Bank Financial Institutions (NBFIs) for the first time to boost loan recovery.

The delinquent borrowers would be able to apply for the facility by paying a minimum 2 per cent down payment.

The repayment period, however, can be extended to one year depending on the financial institutions-customers relationship, as per the central bank notice issued on the day.

As per the notice, the loans of financial institutions could not be duly recovered because of the ongoing Covid-19 pandemic and other reasons.

As a result, those loans have become classified, which prompted the BB to make such an offer.

The one-time exit facility would be applicable for the defaulted loans as of December 31 last year.

The BB said the financial institutions can impose interest rate on the cost of fund between the issuing date and the adjusted period of the loans.

The NBFI will be able to waive a maximum 50 per cent imposed interest, fine and other charges depending on the financial institutions-customers relationship after the approval from the board of directors, as per the BB notice.

The interest to be waived will be transferred to a separate interest-free blocked account.

In the case of interest waiver, the state-run financial institutions have to follow the finance ministry’s instruction.

The borrowers need to apply for the one-time exit facility to the financial institutions concerned within April 30 this year.

The financial institutions will make decision within 60 days after receiving the customer’s application, BB said in the notice. The loans, which got approval under the guise of irregularities and counterfeit process, would be barred from the facility.

The amount of NBFI default loans went up to the tune of Tk 11,757 crore at the end of September last year as per the BB data.

The bad loans in the NBFI sector kept piling up because of massive irregularities and scams, said officials of the central bank.

Only five to six NBFIs out of 34 are doing well, they added.

The NBFI sector is facing an image crisis with the ailing situation of five to six NBFIs, said Mominul Islam, chairman, Bangladesh Leasing and Finance Companies Association recently.