Banks may be allowed to reschedule unpaid loans up to Tk 3.0 billion

Banks will be free to take decision on rescheduling of unpaid loans up to maximum Tk 3.0 billion on bank-client understanding.

The regulator plans ceding part of the onus amid appeal buildups from businesses.                 

Officials say the Bangladesh Bank (BB) plans to relieve pressure in dealing with mounting applications from struggling businesses seeking the central bank's policy supports for a getaway.

As part of the pressure-relaxing recipe on the special committee to settle policy-support-seeking matters, the banking regulator is about to transfer the decision-making responsibility to the banks in respect of settling such appeals of the borrowers with outstanding loans of up to Tk 3.0 billion, sources at the BB said. Appeals may be for both classified and unclassified loans.

But the decisions regarding the businesses which were badly affected by reasons beyond their control and heaving under unpaid loans over Tk 3.0 billion will be made by the BB-formed five-member committee, the sources said.

Banking regulation and policy department (BRPD) of the central bank is likely to issue soon a circular bringing necessary changes in its loan- rescheduling-and restructure-related master circular issued in 2022.

Seeking anonymity, a BB official says the central bank has planned to relax the pressure on the committee by shifting a part of the matters to the commercial lenders concerned to accelerate settling appeals of the struggling businesses for regulatory policy backups.

As part of the plan, the official says, the regulator would give the responsibility to settle cases of their struggling borrowers with outstanding loans within Tk 3.0-billion range.

"A circular is likely to be issued very soon," the central banker told The Financial Express, adding that the loan-rescheduling-and restructuring-related master circular, which was issued in 2022, is set to be revised.

On condition of not getting quoted by name, a member of the committee to deal policy-support affairs says they have been receiving too many applications from the businesses seeking policy directions.

"And the pressure keeps mounting, making it difficult for us to absorb it. We have so far received around 1200 applications but we can only process 500 of them," he said.

As the executives of the commercial banks have been seeking decision-making authority on providing policy supports to their clients, the central bank may go for such pressure-easing move, according to him.

Also known is thinking that the amount of down payment for getting such policy supports can be downsized while the grace period might be extended with an instruction to the borrowers to provide a portion of credits during the grace period so that banks can get some liquidity to pay the depositors.

Managing Director and Chief Executive Officer of Mutual Trust Bank PLC (MTB) Syed Mahbubur Rahman hails the plan, saying that the banks can settle the matters on customer-bank relation.

 About the policy-support issues, the seasoned banker says the intention of the regulator for the default businesses hit hard by the macroeconomic fundamentals in recent years is good but the problem is non-default borrowers, too, started seeking such facility.

Giving an example, the experienced banker says his bank had written off an account earlier. Now, the borrower appeals for such  support. "It is not a healthy scenario," he told the FE writer. Even, there are defaulters who want to contest the upcoming parliamentary polls. So, they need to clear CIB (credit information bureau)-related issues. "They also seek policy supports."

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