On January 29, 2015, the Bangladesh Bank issued a new large loan restructuring policy to stand by big borrowers in trouble.
The policy, which was taken under political pressure from influential debtors, offered a repayment period of up to 12 years, discounted interest rates and down payment as well as repayment in quarterly instalments.
Eleven large business groups got their loans of nearly Tk 15,000 crore restructured, taking advantage of the relaxed policy. Beximco Group alone accounted for a third of the total loans restructured.
After one year of grace period, these loans were due in September 2016. But most of the borrowers have failed to pay their first instalment and three of them even applied to have their loans restructured again.
A recent central bank document showed that the loans, which were restructured in June 2015, rose 17.37 percent to Tk 17,103 crore in absence of repayment.
Currently, nearly two dozen banks are in trouble as their investible funds got stuck and squeezed. One such bank is state-owned Janata that restructured about one-third of the large loans.
Analysts said repetitive rescheduling of loans without analysing the root causes of default did not yield any benefit. Compliant borrowers are also being disheartened, they said.
Khondker Ibrahim Khaled, former bb deputy governor
Both the central bank and commercial banks are helpless because of the borrowers' connection with influential quarters. Only the government can force these borrowers to pay back the loans.
Salehuddin Ahmed, former governor
The central bank can't avoid its responsibility in recovering the loans; it should take stern action against the banks that continue to give undue benefits to borrowers.
Fahmida Khatun, CPD executive director
We can learn from India and other counties which have put in place laws for banks' stressed assets. We should also have a system backed by a legal framework.