The central bank has revived its relaxed loan-repayment policy to keep the ongoing economic activities stable despite long-term negative impact of the Covid-19 pandemic as well as the Russia-Ukraine war, officials said.
Under the relaxed stances, the borrowers of large industries are allowed to repay their term loans, which became unclassified on 01 April, in phases - 50 per cent by April-June of this calendar year, 60 per cent in July-September, and 75 per cent in the final quarter of 2022 - without becoming defaulters.
For cottage, micro, small and medium enterprises (CMSMEs), the borrowers must repay 25 per cent of their payable loans in the second quarter, 30 per cent in the third quarter, and 40 per cent in the last quarter of this year - to avoid falling into the defaulter category, according to a notification - issued by the Bangladesh Bank (BB) on Wednesday night.
Only the term loans, which carry a repayment period of more than a year, will qualify for the fresh relaxed classification rules, it added.
The remaining amount of the instalments will have to be repaid in the same instalments of one year after expiry of the loan period, according to the officials.
"We've tried to create a balance between banks and business entities for the interest of overall economy," a BB senior official told the FE on Thursday while explaining the main objective of the notification.
The issue was discussed in the last bankers' meeting, he added.
Besides, in the flood-hit areas - identified by the Ministry of Disaster Management and Relief, the borrowers will not be declared as defaulters, even if they fail to pay any instalment between April and December of 2022.
The CMSME borrowers in the affected areas will have to clear 25 per cent of their unpaid loans for the nine-month period of this calendar year.
The working capital loans - due as of April 01 this year - can be repaid by December 2022, it added.
The BB's latest moves came after the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the country's apex trade-body, pushed for applying a relaxed loan-repayment policy until this December.
On May 31, the country's businesses sought loan moratorium until December because of "volatile" business ambience globally amid the war in Europe and resultant standoff in the West.
A delegation of the FBCCI with a set of proposals, including suspension of loan classification until the end of this calendar year, met BB Governor Fazle Kabir on the day.
Senior bankers, however, opposed such relaxed loan-repayment policy, saying that it would bring down the amount of classified loans for the time being, but it would ultimately push up the amount of defaulted loans in the banking sector.
"The business community has become strong in lobbying with the government as well as the regulators," Md Nurul Amin, former chairman of the Association of Bankers, Bangladesh (ABB), told the FE.
The senior banker also said: "It will help reduce the amount of defaulted loans for the time being. But in the long run, it will slow down loan recovery, and the amount of non-performing loans may increase further."
Earlier, the BB offered a deferral loan classification facility from January 2020 to December 2020, considering adverse impact of the Covid-19 pandemic on people and businesses.
In 2021, the borrowers were allowed to avail a chance to remain unclassified, if they repaid minimum 15 per cent of their total outstanding loans for the whole calendar year by December 31, 2021.
The central bank discontinued such support only for the first quarter of 2022, as intensity of the virus outbreak lessened, paving the way for strong rebound of the economy, before coming under pressure of the Russian-Ukraine war.