The central bank yesterday instructed banks to relax loan rescheduling rules for businesses affected by political instability.
“Borrowers urgently require a lifeline in the form of increased and renewed credit lines so that they are able to pay their expenses and meet commitments in the prevailing economic environment,” said a Bangladesh Bank high official.
In a guideline released yesterday, the central bank suggested the lenders reconsider the matter of loan rescheduling and down payment period on a case-by-case basis for the affected borrowers in all sectors, until June next year.
However, the banks will have to take prior approval from the authority and no-objection certificate from the central bank.
At present, depending upon the type of loans banks take 10 to 15 percent down payment for loan rescheduling and give six months to three years for loan repayment.
The BB official said depending upon the bank-client relationship, the banks can now lower the down payment ratio and increase the loan repayment period.
However, the facilities will not be extended to those who were defaulters before the political unrest started.
Prior to releasing the guideline, the central bank sat down with all commercial banks to discuss the current situation, where all bankers were against the idea of extending the facilities to all on ground that it will increase the default loan culture.
The bankers instead suggested that the central bank relax the loan rescheduling rules on a case-to-case basis, as it will help reduce the amount of classified loans, increase recovery rate to some extent and maintain the banks' profitability.