Banks readying for BB loan policy relaxation

Siddique Islam | Published: December 25, 2013 00:00:00 | Updated: November 30, 2024 06:01:00

Commercial banks have started taking preparations for implementing the central bank's latest relaxed loan rescheduling policy to facilitate financing for businesses, affected by the ongoing political unrest.
"Both banks as well as businessmen will be benefited from relaxation of the loan rescheduling policy," Nurul Amin, chairman of Association of Bankers, Bangladesh (ABB), told the FE Tuesday.
The Bangladesh Bank (BB) Monday relaxed the loan rescheduling policy on a limited scale for the next six months to ensure fresh financing for the affected businesses across the country.
Mr. Amin, also managing director (MD) and chief executive officer (CEO) of NCC Bank Limited, said the banks will take into consideration impact of the prevailing political unrest on the businesses while rescheduling or restructuring their loans.
"We've been empowered to reschedule and restructure the loans of all affected sectors, including apparel and clothing, housing, transport, agriculture, and small and medium enterprise (SME), following the BB's loan rescheduling policy relaxation," the ABB chief explained.
Talking to the FE, Helal Ahmed Chowdhury, MD and CEO of Pubali Bank Limited, said the banks want to provide maximum support to the really affected businessmen, considering their previous track record.
"We're expecting policy support from the central bank as well as the government regarding reduction of corporate tax for the banks as well as quick release of cash incentive fund and enhancement of cash incentive for the exporters," Mr. Chowdhury noted.
The Ministry of Finance (MoF) is now working to provide an incentive package to the affected apparel industries by reducing tax and increasing their existing facilities.
The central bank on December 19 proposed the MoF to provide 3.0 per cent subsidy on export-loan interest for offsetting exporters' loss amid the ongoing political unrest.
Currently, export loan carries 7.0 per cent interest rate, but the banks are not interested in giving the loan, as it does not match their cost of funds.
According to the BB proposal, the banks might be allowed to charge 10 per cent interest on export loan. The exporters will pay 7.0 per cent interest and the rest 3.0 per cent will be paid by the government as subsidy.
"We're expecting a stimulus package for the apparel sector, affected by the ongoing political turmoil, will be announced shortly," a senior government official told the FE.