Get repayment plans justified by int’l auditors for settling default loans

Settling classified loans gets tougher as government's loan-recovery support committee asks defaulters to justify their annual revenue earnings and loan-repayment capabilities by engaging reputed international auditors, insiders said.

The corporates and businesses at repayment fault have also been asked to incorporate their lenders-commercial banks and nonbank financial institutions (NBFIs)-into the verification system before getting the loan-repayment-relaxation facilities, they told the FE Friday.

Some big-shot corporates and businesses have queued up with petitions for longer-term loan- repayment facilities from the recovery-support committee formed by the post-uprising government as they want to pay back the overdue and classified loans.

At least 60 big companies have already applied for the settlement of their classified loans, the sources said. They include Beximco Group, Gazi Group, Abdul Monem Group, Aman Feed, EnergyPack, Desh Bandhu Group, Zahintex Industries Ltd, Amazing Fashion, and HKG Steel.

Besides, Universal Yarn, Ershad Brothers, Tampaco Foils Ltd, ZahinTex, Rownak Spinning, Universal Yarn, and Spider Digital Security, among others, are in the queue seeking long-term loan-repayment facilities.

The government panel has already scrutinised nearly 40 applications of tycoons holding unpaid credits ranging from Tk3.0 billion to Tk 80 billion in the process of recovery of the credits that have accumulated over the years of lending leniency.

"We have been scrutinising the applications of the corporates and businesses. We have verified some 50 applications involving hundreds of crores of taka worth of loans, which have become stuck-up or classified," says a member of the loan-recovery committee.

He says they won't allow those applications until the annual revenue-earning and loan-repayment plans of those borrowers are validated by internationally reputed audit firms.

"The companies have already applied to us with their revenue-earning and loan-repayment plans seeking long time, but we will not endorse without the justification of their commitment," says another member of the panel of experts.

Meanwhile, the big borrowers have mainly sought some 5-10-year loan-repayment timelines with at least one-year grace period, the member of the committee told the FE writer.

Many of them have sought waiver of interest for paying the principal amount of the loans with instalments facilities for long, he added.

And some of the corporates seek loan-rescheduling facilities again after already having their loans rescheduled 2-3 times.

The recovery committee has reviewed the problematic and non-performing loans (NPLs) taken from the country's different commercial banks and financial institutions at its last 3-4 meetings, insiders said.

At all the meetings, the borrowers as well as banks and NBFIs were present to submit their views.

Meanwhile, the central bank formed the 'selection committee for policy support to restructure businesses and financial management' on January 30 that sat with the international and national private commercial banks' officials in mid-February.

The committee would review whether the applicants with big NPL-or classified-loan holders are wilful or non-wilful defaulters.

The government-set committee would select those defaulters which had not rescheduled their loans more than thrice. And those companies might be eligible for the servicing of their outstanding loans on relaxed terms and conditions.

Earlier, the BB-formed independent panel had also requested each of the commercial banks and NBFIs to sift out non-wilful defaulters whose businesses had been affected for multiple reasons, including Covid-19 pandemic, the Russia-Ukraine war, energy prices, US dollar shortages, and the July-August 2024 mass uprising.

The five-member committee will list out non-wilful defaulters who have loans of Tk 500 million or above with various commercial banks.

The committee member says since many banks are in a shambles owing to financial crisis, the previous loan- rescheduling system, and some other reasons, some of them are not willing at this moment to give any more opportunity to the affected businesses, says Mamun Rashid, an ex-banker and a member of the govt-formed committee.

"We will actually go with the bank-led model. We will not force them beyond the national and international practices. We will scrutinise some international models used in Indonesia, Thailand, Sri Lanka, India and the Philippines. Then we will request the banks to give some respite to the affected businesses," he explains.

Mamun Rashid says many businesses that contribute to the industrial sector, for example by generating employment, and were affected due to any of the five reasons should get opportunities to continue their operations with the support of their respective banks.

"So, we are hopeful the banks will come forward to help us select the non-wilful defaulters and give them respite."

The committee will select the industries and entities which have been badly affected by reasons beyond their control before handing out policy support for their revival, Mr Rashid adds.

kabirhumayan10@gmail.com