Borrowers get fresh loan moratorium facility

The Bangladesh Bank has introduced a fresh loan moratorium facility for the industrial, CMSME (cottage, micro, small and medium enterprises) and agriculture sectors, to help borrowers tackle challenges such as the ongoing supply chain disruption, rising Covid infections and floods.

These sectors will enjoy a flexible loan repayment facility up to December this year.

Only the loans that were unclassified as of April 1 this year will be eligible for the new relaxed repayment facility. Borrowers who enjoyed the central bank’s relaxed facility in 2019 can also get the deferral support.

Previously, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on May 31 urged the Bangladesh Bank to introduce a fresh loan moratorium facility till December this year.

In response, the central bank’s Banking Regulation and Policy Department (BRPD) issued a circular on Wednesday and stated that due to the supply chain disruption created by the Russia-Ukraine war, the increasing trend of covid-19 infection and floods in the country’s north and north-eastern areas, businesses are facing challenges, so the moratorium facility has given.

This facility is conditional on repaying the loan instalments in different phases from April to December this year.

As per the Bangladesh Bank’s latest instructions, borrowers in large industries would be able to avoid falling into the defaulted loan category by repaying half of the term loans payable for the April-June period this year.

The borrowers must clear 60 per cent of their unpaid loans in the July-September quarter and 80 per cent in the Oct-Dec of 2022 if they do not want to be classified as defaulters.

For CMSMEs, borrowers must pay 25 per cent of the payable loans in the April-June quarter this year, 30 per cent in the second quarter and 40 per cent in the last quarter of 2022 to avoid the default status.

Only the term loans, which carry a repayment period of more than a year, will qualify for the fresh relaxed classification treatment, read the central bank circular. The regulator has also given special facilities for the agriculture and CMSME sectors in the flood hit regions.

In such areas, borrower-farmers will not be declared defaulters even if they fail to pay any instalments between April and December. Besides, CMSME borrowers in the affected areas will have to clear 25 per cent of the unpaid loans for the nine-month period.

For existing unclassified demand loans until 1 April 2022, if repaid in three equal quarterly instalments between June and December 2022, then those loans cannot be classified till 31 December 2022.

This circular also stated that in case of repayment of loan instalments, no penalty interest or additional fee can be charged.

The previous loans moratorium facility for borrowers, which was first introduced in mid-2020 amid the pandemic, ended on December 31 of last year. Under that facility, borrowers were not recorded as defaulters even if they failed to pay any instalments in 2020.

Under that facility borrowers who were able to pay just 15 per cent of their scheduled instalments remained out of default status in 2021.