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The central bank has further extended the policy relaxation regarding loan repayment to the scheduled banks by their borrowers to help recover the country's pandemic-hit economy, officials said.
Under the relaxation, the borrowers would get a fresh chance to remain unclassified, if they repay minimum 25 per cent of the total outstanding amount of loans for the whole calendar year within
December 31, according to a notification issued by the Bangladesh Bank (BB) on Friday.
In that case, the remaining 75 per cent of the outstanding loans from January 2021 to December 2021 would be payable within one year from the date of expiry of the loans, it added.
"We've relaxed the loan classification policy further to help the country's business community to overcome the adverse impact of the pandemic second wave on their businesses," Abu Farah Md. Nasser, deputy governor of the Bangladesh Bank (BB), told the FE while explaining the main objective of the notification.
The BB officials, however, said the central bank would issue a separate directive, relating to maintaining provisioning against such loans, by the end of this year.
All borrowers are eligible to avail such loan repayment facility, if they repay one-fourth of their total outstanding loans within the stipulated timeframe, the officials explained.
On June 27, the BB relaxed its policy, allowing the borrowers to get a chance to remain unclassified, if they repay minimum 20 per cent of the total outstanding amount of March and June quarters within August 31 on the basis of 'banker-customer' relationship, following the resurgence of the Covid-19 outbreak.
Senior bankers, however, said the BB's latest policy relaxation would help curb the rising trend of non-performing loans (NPLs) by the end of this calendar year.
Talking to the FE, Syed Mahbubur Rahman, former chairman of the Association of Bankers, Bangladesh (ABB), said: "It will help prevent further rise in classified loans in the country's banking sector."
"It'll help keep NPLs at a reasonable level by the end of 2021," Emranul Huq, managing director (MD) and chief executive officer (CEO) of Dhaka Bank Limited, told the FE.
Mr. Huq also said the banks should strengthen their recovery drives, considering the cash-flow of their clients.
The amount of classified loans in the banking sector increased by nearly 12 per cent to Tk 992.05 billion as on June 30 from Tk 887.34 billion six months before, despite providing policy support by the central bank.
The BB also offered a deferral loan classification facility from January 2020 to December 2020, considering the adverse impact of the Covid-19 pandemic on people and businesses.