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The Bangladesh Bank on Sunday issued a circular that empowers banks to extend the repayment tenure of existing term loans by up to two years.
A BB circular issued in this regard, however, said that the bank borrowers would no longer get the moratorium facility against their outstanding loans.
The country’s borrowers enjoyed the moratorium facility against their outstanding bank loans for the entire year of 2020 following the coronavirus outbreak in the country on March 8, 2020.
Sunday’s circular said that the repayment tenure extension would only be given against unclassified loans.
Loans which have turned irregular would not be eligible for the repayment tenure extension.
The extension would be highest 50 per cent on the remaining period of loan payment of the term loans, the circular said, adding that the repayment extension, however, cannot be given for more than two years.
Under the facility, the extended period of repayment would not give borrowers respite from instalment payment but the time extension would lower the amount of periodical instalment, said a senior official of the central bank.
Whether the client would get the tenure extension or not would completely depend on the banks as the BB refrained from making it mandatory for the banks to give tenure extension to their customers.
The central bank has refrained from extending the moratorium facility as it was observed that only one-fourth of the bank borrowers had availed the scope of loan instalment nonpayment, the BB official said.
The number of borrowers who availed the payment deferral facility during the most COVID-impacted period implies that threefourth of the country’s bank borrowers were capable enough of repaying instalments and the BB hopes the capacity of the borrowers will improve in the year 2021, he said.
Of the amount considered for moratorium facility, the borrowers paid 14.5 per cent of the overdue payments during the year 2020, the BB official said.
Despite the fact, the central bank has created the scope for the term borrowers so that their per instalment payment amount becomes slimmer, he said.
On March 19, 2020, the BB floated the loan moratorium facility for all the bank borrowers till June 30 of the year.
Later, the validity of the exemption against loan instalment payment was extended twice till December 31, 2020.
Along with providing exemptions from paying instalments, the loan classification of the borrowers remained unchanged for the entire year of 2020, bringing down the volume of defaulted loans in the country’s banking sector to Tk 94,440 crore at the end of September 2020 from over Tk 1,16,000 crore a year ago.
(NA)
