Easy rescheduling for defaulters in the works

The central bank is working to allow defaulters to regularise their classified loans by furnishing 2 percent down payment as it engineers to bring down the high non-performing loan figure.

“The initiative will help both the banks and clients,” SM Moniruzzaman, deputy governor of the Bangladesh Bank, said yesterday at the inaugural session of a research almanac organised by Bangladesh Institute of Bank Management.

He, however, expects criticism from different corners given the central bank’s previous restructuring facility for large borrowers.

In 2015, 11 large business groups got their loans amounting to about Tk 15,000 crore restructured on relaxed terms.

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, and quarterly repayment instead of monthly.

But most of the borrowers have failed to pay their instalments and entered the default zone again.

This escalated the classified loan figures, and in the third quarter of last year it grazed Tk 1 lakh crore.

At the end of 2018, default loans stood at Tk 93,370 crore, which is 10.33 percent of the total outstanding loans in the banking sector. The central bank is carrying out its routine supervision work on the banking sector in a proper manner, Moniruzzaman said.

“But some people have recently alleged that default loans in the banking sector are on the rise because of weak monitoring by the central bank. It is not right.”

They alleged that some non-bank financial institutions are performing badly.

“But I want to raise a question: why do clients park their deposits at high interest rate with them? Whatever happens, all blame is passed on to the central bank.”

He also said the central bank was compelled to give licences to new banks without disclosing from where the pressure came.

“Now, a demand has been made to decrease the number of banks. But it is not an easy task as strong banks never want to merge with weaker ones,” he added.

Barkat-e-Khuda, Dr Muzaffer Ahmad Chair professor of BIBM, presided over the session, where Prashanta Kumar Banerjee, a professor of BIBM, delivered the welcome speech.