NBFI loan defaulters offered relaxed rescheduling facility
The central bank yesterday relaxed the rules on credit rescheduling and restructuring for the borrowers who have defaulted on the repayments of loans with non-bank financial institutions (NBFIs).
In a notice, the Bangladesh Bank said the cash flow for small, medium and large borrowers and firms has been adversely impacted because of the dragging effects of the coronavirus pandemic and the Russia-Ukraine war.
In some cases, loans can't be rescheduled or restructured under existing guidelines. The new guideline has been issued to help NBFIs manage classified loans properly and make loan repayments easy for the affected borrowers, it said.
The new rescheduling or restructuring guideline for NBFIs came nearly two months after the BB offered an almost similar facility for banks.
At the time, analysts, however, warned that the relaxation of the rescheduling policy would weaken the health of the country's banking sector, which has already been struggling to bring down its non-performing loans in recent years amidst a lack of corporate governance.
The NBFI sector is equally saddled with higher NPLs.
As of June, default loans in the NBFI sector stood at Tk 15,936 crore, which is about 23 per cent of the total outstanding loans.
Previously, there was no loan restructuring opportunity in the NBFI sector. The new circular has brought the loan restructuring under a guideline. However, rescheduling or restructuring can't be done more than four times.
Earlier, defaulters were able to regularise loans by paying 10 per cent to 30 per cent of unpaid loans as a down payment.
Now they would receive the facility by making a down payment of 4 per cent for the first rescheduling, 5 per cent for the second rescheduling, and 6 per cent for the third and fourth rescheduling, according to the latest guideline from the BB.
Previously, there was no scope to reschedule a loan for the fourth time. The new facility has allowed borrowers to have their loans regularised for the fourth time.
Earlier, the repayment period for a rescheduled loan could be set at 24 months to 48 months. Now, the scope could be extended for a minimum of 60 months to a maximum of 72 months.
A six-month grace period has been introduced under the new guideline.
NBFIs would get three months to decide whether to approve a loan rescheduling or restructuring, up from one month in the past.
If a loan has already been regularised for the third time before the issuance of the latest notice, it can be offered the facility for another time, said the BB.
Loan rescheduling or restructuring opportunities can't be extended if funds amounting to six instalments are not realised. At the same time, no funds can be transferred to the income segment of NBFIs without actual recovery of loans.
The BB has asked NBFIs to file cases against borrowers if loans remain unpaid even after giving the rescheduling or restructuring scope four times.
In the case of takeover loans, NBFIs will have to take into account the rescheduling or restructuring offered by the previous banks or NBFIs.
Loans secured through irregularities can't be restructured or rescheduled. Similarly, NBFIs can't waive interests or profits before covering the cost of funds, said the BB.