The central bank further relaxed the repayment policy for the borrowers of outstanding loans or leases from non-banking financial institutions (NBFIs) with a greater government goal to help recovery of the pandemic-hit economy, officials said.
Under the relaxations, the borrowers will get a fresh chance to remain unclassified if they repay minimum 50 per cent of the total outstanding amounts of loans or lease for the whole calendar year by December 31 on the basis of the NBFI-customer relationship, according to a notification issued Wednesday by the Bangladesh Bank (BB).
However, the remaining 50 per cent of the outstanding loans or leases from January 2021 to December 2021 will be payable within one year from the date of expiry of the loans or leases, it added.
"We've relaxed the loan-classification policy further to help country's businessmen to overcome the adverse impact of the second wave of the Covid-19 pandemic on their businesses," a BB senior official told the FE while explaining the main objective of the relaxation.
The interest on such loans will be booked as interest income only after realization of the same properly, the central banker added.
Earlier on July 05 this calendar year, the BB relaxed its policy to allow the borrowers to get a chance to remain unclassified if they repay minimum 50 per cent of loan or lease as of June within August 31, 2021, on the basis of the NBFI-customer relationship following the resurgence of the Covid-19 outbreak.
Senior executives of NBFIs, however, said BB's latest policy relaxation would help curb the rising trend of classified loans in the sector by the end of this calendar year.
"It'll help keep non-performing loans (NPLs) at a reasonable level by the end of 2021," Md. Golam Sarwar Bhuiyan, vice chairman of Bangladesh Leasing and Finance Companies Association (BLFCA), told the FE.
Mr Bhuiyan, also managing director of Industrial and Infrastructure Development Finance Company (IIDFC) Limited, feels such policy relaxation will also help Covid-affected businessmen continue their business.
He, however, said the customers have already raised questions about the repayment percentage of total outstanding loans between the banks and NBFIs on the same grounds.
Earlier on August 26, the central bank relaxed its policy further to allow the borrowers to get a fresh chance to remain unclassified, if they repay minimum 25 per cent of the total outstanding amount of loans, for the whole calendar year to December 31.
Meanwhile, the amount of classified credits in the country's NBFIs jumped over 47 per cent to Tk 100.35 billion as on March 31 this calendar year from Tk 70.34 billion the same day in 2020, despite providing policy supports by the central bank.
It was Tk 100.54 billion as on December 31, 2020.
Actually, the NBFIs had not been allowed to classify loans or leases adversely until December 31, 2020, in line with the BB's directives.
Earlier, the central bank had asked the NBFIs not to be harsh while classifying loans in order to help businessmen offset the adverse impact of the Covid-19 pandemic on their businesses.
Besides, Proshanta Kumar Halder, also known as PK Halder, a former managing director of Reliance Finance Limited, allegedly embezzled about Tk 35 billion from four non-banks, imperiling the entire NBFI sector of Bangladesh.
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