Dhaka, Bangladesh (BBN) – The country’s apex trade body has expressed their reservation over the central bank’s new rules for loan classification, rescheduling and provisioning.
“The new instruction will affect industries, particularly the export-oriented ones which are badly hit by a tightening monetary policy and the Eurozone crisis,” the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said in a statement on Tuesday.
In line with the new Bangladesh Bank (BB) directive, an ongoing loan operation will be classified in the event of non-repayment of any instalment within three months, instead of the six-month duration now in effect. Term loans of five years have also been brought under this category.
The base for provisioning has been fixed at 20 percent of the outstanding balance of the credits while strictly limiting the rescheduling facility of any default loan up to the third-time only.
The FBCCI urged the BB to withdraw the circulars, saying the moves would badly hamper the country’s business activities.
“Given the present liquidity position amid energy crisis and a slowdown in international economy, it is not appropriate to tighten the terms and conditions of commercial banks’ loan agreements,” the FBCCI added.
The Association of Bankers Bangladesh (ABB), a platform of banks’ managing directors, has requested the central bank to extend the deadline for implementation of the new directive to January 1, 2014 from July 1 of this year.
The central bank in its circular on June 14 said the new terms and conditions on loan classification, provisioning and rescheduling will ensure stability in the country’s banking sector and take it to international standards.
BBN/SSR/AD-26June12-11:45 pm (BST)