Commercial banks now can offer special rescheduling facility for up to 10 years with a two-year grace period to borrowers whose loans are classified as of November 30, under a generous government bailout package.
In a major regulatory policy shift, the central bank issued Monday a circular relaxing regulations aimed at restoring the struggling business and financial operations of both classified and unclassified borrowers.
The Bangladesh Bank firman, issued by its banking regulation and policy department (BRPD), says the facility comes for borrowers whose loans are classified as SS or substandard, DF (doubtful), or BL (bad/loss) as of November 30.
Earlier, the timeline was June 30, 2025.
To avail the facility, the borrowers will have to pay 2.0 per cent of their outstanding loans as down payment. But the borrowers will not be allowed to show paid loan installments or its part before submission of the application as special down payment.
Regarding special loan-restructuring facility, the BB circular states that the unclassified borrowers facing problems can avail the facility up to December 31 next and the borrowers can get the facility for maximum two years of the stipulated timeline.
The central bank further eases special exit facility allowing the classified borrowers to change their loan status to unclassified after exiting through the facility.
Simultaneously, the classified borrowers through the exit policy will now get non-funded facility like the opening of letter of credits, according to the circular.
The central bank's policy relaxation comes twelve days after the BB's meeting with bank executives where the central bankers asked the bankers to somehow control the mounting growth of NPLs (non-performing loans) through intensifying cash-recovery drives.
The central bank officials concerned also ordered the bankers to implement the tool of policy supports to revive the ailing businesses, which will also help reduce the leaping classified-loan buildups the banking industry now reeling from.
The banking regulator, led by its deputy director Dr Md. Kabir Ahmed, made the direction to the managing directors, chief executive officers and chief financial officers of the commercial banks at the meeting titled 'The NPL Resolution'.
Managing director and chief executive officer of Mutual Trust Bank (MTB) PLC Syed Mahbubur Rahman appreciates the measure made by the interim government, saying that the latest circular eases the process of bankers who used to visit the BB quite often to get its approval for providing such facility.
"Now, banks can easily decide over such policy support to the struggling borrowers based on bank-client relationship," he adds.
Seeking anonymity, the managing director of a commercial bank says the BB officials sat for a meeting nearly couple of weeks ago with the bank executives and informed them that the NPLs in banking sector rose over 30 per cent by the end of September last, which surprised the visiting IMF review-team members.
"I think the policy relaxation comes to control the mammoth NPL growth and we may see a significant change in NPL numbers by yearend," he adds.
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