BB extends relaxed loan classification policy

Bangladesh Bank has further extended the period during which its relaxed loan classification policy would stay in effect, given the ongoing business slowdown brought on by the coronavirus pandemic.

As per the Bangladesh Bank decision, borrowers will be able to avoid the default zone by paying 25 per cent of each instalment of their loans until December this year.

The remainder of each instalment will have to be paid within next year.

The central bank issued a notice on August 26 asking banks to follow the instruction such that the beleaguered businesses can take a breather from the ongoing slowdown.

On June 27, the central bank said borrowers could avoid the default zone paying 20 per cent of each instalment of their loans until June 30. Moreover, that due for June could be paid in August.

The banking regulator went for extending the relaxed policy's duration on the back of requests of a good number of trade organisations citing the economic slowdown.

In addition, default loans in the banking sector have also started to go up since the first quarter of this year as the central bank withdrew a moratorium facility.

Borrowers enjoyed a yearlong moratorium facility throughout last year.

Non-performing loans stood at Tk 99,205 crore in June, up 11.80 per cent from six months earlier and 3.21 per cent year-on-year, showed data from the BB.