Fresh loan moratorium hinges on bank-client relations: BB

Borrowers will be able to avail a fresh repayment deferral support, this time for three months, based on the bank-customer relation.

Bangladesh Bank issued a notice yesterday saying lenders would have to take into consideration whether they would be able to do with not taking the instalment of loans from borrowers for the first quarter of this year. Borrowers will have to start providing the repayment instalments from the second quarter.

The central bank mentioned that borrowers taking three categories of loans -- term, demand and continuous -- will enjoy the loan deferral support.

This means all borrowers in the banking sector would enjoy the new facility, except for loans given out through credit cards, said a managing director of a bank, wishing not to be named.

A high official of the central bank said the banking regulator had taken the initiative given the rise in coronavirus infections at home and abroad.

This has already put an adverse impact on the economic situation in different countries, including European and North American nations, he said.

"Although the country's business situation has improved a lot in recent months, the upward trend of infections has already created a downside risk," he said.

Against this backdrop, the central bank has taken the decision to provide another loan deferral support of three months.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) in December had requested the central bank to extend the loan moratorium until June.

In March last year, the central bank declared a loan moratorium facility for the banking sector, which was effective throughout last year.

But a difference exists between the two moratoriums, as the previous one was enforced by the central bank and the latest one will be implemented based on bank-customer relations.

The central bank also relaxed the loan payment structure of continuous and demand loans.

A good number of clients who had taken continuous loans were unable to pay the instalments last year.

The interest amount of the continuous loans, which were scheduled to be paid last year, will be repaid within June next year.

Clients will be allowed to pay the interest amount, including the principal one, in six quarterly instalments till June 2022.

As much as 37 per cent of loans are treated as continuous credit of the outstanding loans amounting to Tk 11,58,775 crore in the banking sector as of December last year.

The repayment tenure of continuous loans is a maximum of one year, which is also treated as working capital.  

Clients, who had taken demand loans, will also get almost the same support.

Banks will have to restructure the demand loans, allowing customers to pay the fund within December next year.

Borrowers will pay the loan in eight quarterly instalments.

Demand loans accounted for around 15 per cent of the outstanding loans in the banking sector.

Clients will get a maximum of one year to repay demand loans.

In most of the cases, banks create such loans when importers fail to adjust their payments on time.

On January 31, the central bank also eased the repayment facility for term loans.