BB extends loan repayment period to Dec 31

The central bank has directed banks not to classify borrowers as defaulters even if they fail to repay loan instalments by December 31.

A circular in this regard was issued by the Banking Regulation and Policy Department of Bangladesh Bank on Monday (September 26).

Earlier, Bangladesh Bank (BB) offered this facility to borrowers until September 30. Now it has been extended to December 31.

According to the new guidelines issued in the circular, borrowers will not be considered as a defaulter even if they do not pay any loan instalment for the period from January 1 to December 31 this year. No penalty, interest or additional fee (whatever the name may be) may be levied on the during this period.

The circular, sent to the chief executives and Managing directors of all scheduled banks operating in Bangladesh, said the central bank had given special concessions on loan classification considering the negative impact of the coronavirus pandemic on Bangladesh's economy.

Covid-19 pandemic has affected most sectors of the economy and many industries, services and businesses are unable to conduct their normal activities as its negative impact is likely to be prolonged.

In view of this situation and in order to minimize the negative impact of Covid-19 on the business of the borrower, a policy of determining and classifying the loan repayment schedule has been formulated, the circular said.

However, as per the circular, if the class quality of a loan improves, it can be categorized accordingly.

Moreover, the circular further said, rational rebate facility can be provided by the bank to encourage the clients to repay the term loan, including short term agricultural loan and microloan, in instalments voluntarily and to repay the current and call loan.

Necessary instructions will be given later regarding the transfer of interest to the interest income sector on extended loan for repayment of instalments and preservation of provision against the loan.

This instruction will be effective immediately for scheduled banks, the circular said.

ask/zn