The central bank has extended for three more months the suspension of rigid rules for classification of loans to help the businesses overcome the damaging effect of the Covid-19 pandemic.
It issued a notice Monday asking all banks not to be harsh while classifying loans until December 31 next. The original deadline for the facility was due to expire on September 30 next.
This is the second extension. The concession that came into effect for the first time on March 19 was made effective until June 30. But it was extended for another three months until September 30 to help the businesses battered by the pandemic.
Besides, the repayment of all loan instalments has been deferred from January 01 to December 31, officials said.
The central bank, however, said it will issue a new directive on the provisioning of such loans and advances for the period.
"We'll issue the directive considering the financial health of the banks during the July-September period of this calendar year," Abu Farah Md. Naser, executive director of the BB, told the FE.
The directive is expected to issue within October or November, he added.
"The banks are allowed to provide interest rebate facility to the borrowers to encourage them to repay loans," the central banker said regarding the possible impact on cash flow for relaxation of such policies.
Syed Mahbubur Rahman, former chairman of the Association of Bankers, Bangladesh (ABB), welcomed the BB's latest move, saying it is necessary for revamping business activities across the country.
"Businessmen are still facing problems due to the pandemic," Mr. Rahman, also managing director and chief executive officer of Mutual Trust Bank Limited, said.
Talking to the FE, another BB official said, all types of borrowers will be benefited by the relaxation.
He also said the banks will also not be allowed to impose any penal interest on such loans.
The central bank relaxed its policy on March 19 this calendar year asking the banks to suspend stringent classification of any loans until June 30 on the same ground.
Later, the BB extended the relaxation period for three more months until September 30 to facilitate business activities that have been adversely affected by the pandemic.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) had earlier requested the central bank to extend the existing time limit for non-classification of loans by six months to December, 2020 considering the Covid-19 pandemic.
The country's apex trade body in June last had made the request in the wake of the adverse impact of COVID-19 pandemic on trade and economy.
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