Cold storage owners get one more month for rescheduling

Bangladesh Bank yesterday gave cold storage owners another month, until November 30, to apply for rescheduling their default loans.

The timeline has been extended because a majority of clients are yet to apply, said the central bank.

In a July 13 circular, the banking regulator said banks would be able to reschedule the default loans of cold storages, which are mainly used in the country to preserve potatoes.

Depending on the relationship with the customer, banks can allow a maximum of 10 years, including a one-year grace period, for the loan to be repaid, a move that comes following demands from a cold storage association.

For rescheduling, banks will need to separate the balance of classified loans as of June 30 this year in two accounts -- one for the principal and the other for the interest, which banks can not draw as income until the whole loan has been paid off.

The interest will be charged on the principal amount as per rules and the borrowers will have to pay an instalment every six months.

The borrowers have to first make a down payment and then can enjoy the grace period, after which the banks can realise the principal amount and then the interest in the account.

A borrower can also repay loans during the grace period.

Bangladesh has 400 cold storages.

Industry insiders say they suffered losses for several years for different reasons, including blockades amidst political unrest in 2013.