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The Financial Express
Swasti Lankabangla Swasti Lankabangla

BB relaxes loan restructuring policy for NBFIs

| Updated: August 11, 2020 13:04:44


The Bangladesh Bank seal is pictured on the gate outside the central bank headquarters in Motijheel, the bustling commercial hub in capital Dhaka — FE Photo/Files The Bangladesh Bank seal is pictured on the gate outside the central bank headquarters in Motijheel, the bustling commercial hub in capital Dhaka — FE Photo/Files

The central bank has relaxed its loan restructuring policy for non-banking financial institutions (NBFIs) to help the businesses overcome the adverse impact of the Covid-19 pandemic.

Under the relaxations, the NBFIs are allowed to extend the tenure of term loans and leases by a maximum of 50 per cent of the remaining time to maturity, instead of existing 25 per cent, according to a notification issued by the Bangladesh Bank (BB) on Sunday.

"We've relaxed the policy to help businessmen offset the adverse impact of Covid-19 on their businesses," a BB senior official told the FE while explaining the main objective behind the relaxation.

Talking to the FE, another BB official said the NBFIs are also empowered to extend such tenure of restructuring loans and leases without prior approval from the central bank.

The Bangladesh Leasing and Finance Companies Association (BLFCA) welcomed the BB's latest move, saying that it will help the sector reduce the volume of non-performing loans in the near future.

"The BB has relaxed the policy in line with our requirements," said Mominul Islam, chairman of the BLFCA, a forum of managing directors (MDs) and chief executive officers (CEOs) of the NBFIs.

The association has sought such relaxation at its meeting on June 30, according to Mr Islam, also managing director and chief executive officer of IPDC Finance Limited.

"It will also help our clients repay their loans smoothly," said the BLFCA chairman.

Earlier on June 21, the BB slashed cash reserve ratio (CRR) by 100 basis points to 1.5 per cent from 2.5 per cent for the NBFIs considering the Covid-19 pandemic.

Such reduction of CRR also helped the NBFIs use more than Tk 3.0 billion as loanable funds to implement the government announced stimulus packages, according to officials.

Prime Minister Sheikh Hasina has so far announced a total of 19 stimulus packages worth Tk 1.03 trillion to help various sectors of the economy offset the losses they have suffered due to novel coronavirus (Covid-19) pandemic.

The packages, which are equivalent to 3.7 per cent of the country's gross domestic product (GDP), will be implemented under the supervision of the central bank and the ministry of finance.

Currently, 34 NBFIs are running their business across the country. In June 2020, the central bank issued a licence to Strategic Finance and Investments Limited for running their business as an NBFI.

siddique.islam@gmail.com

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