Covid-19 fallout: Central bank’s move to ease financial burden of borrowers

The central bank today directed banks to transfer all interest accrued or to be accrued between April 1 and May 31 this year from all of their loans to an interest-free blocked account.

A blocked account refers to an account that does not allow for the indiscriminate withdrawal but instead has certain restrictions or limitations on when, how much, and by who, capital can be withdrawn.

Besides, banks are not allowed to transfer the interest or profits deposited in the blocked account of the borrowers to lenders' income book until further notice, according to a central bank notice.

This is a great move to help the borrowers during the ongoing fallout as banks are not permitted to impose compound interest on the total outstanding loans of the businesses, a Bangladesh Bank official said.

He thinks that the creation of the block account means borrowers might get further facilities in the days ahead.

"The central bank may either ask banks to waive the whole amount of interest in the block accounts or adjust the amount with their principal amount of loans," he said.

The central bank is yet to take any decision to this end.

The government earlier assured businesses of taking initiative to reduce their financial burden amid the ongoing economic fallout resulting from the coronavirus pandemic.