Dhaka, Bangladesh (BBN)-The central bank has relaxed down payment rules by empowering financial institutions to reschedule loans of the clients, who went into hiding or were detained in jail during the last caretaker government.
Under the new provisions, the non-banking financial institutions (NBFIs) can now reschedule classified loans or leases on the basis of their relationship with clients until June 30, 2010, officials said on Thursday.
The loan reschedule facility will be applicable to those against whom charges were not proved, the Bangladesh Bank (BB), the country’s central bank, officials added.
“To avail such a facility, all necessary documents about the period of their confinement or hiding and what type of legal actions taken against them must be submitted to the non-banking financial institutions (NBFIs) concerned,” a BB senior official said.
The central bank of Bangladesh has already issued a circular in this connection and asked the chief executives and managing directors of all 29 NBFIs to follow the latest instructions for rescheduling such loans.
“We’ve taken the move with a view to helping industries regularize their loan portfolios, thus facilitate their business activities,” the BB official said, adding that the NBFIs would fix the criteria for reschedule of the loans or leases using their own assessment.
To reschedule the term loans for the first time, borrowers have to pay minimum 15 percent of the expired installments or 10 percent of total dues, whichever is lower, according to the existing provisions.
It will be minimum 30 percent for expired installments or 20 percent of the total dues, whichever is lower, for a second-time rescheduling. For the third-time rescheduling, it will be 50 percent and 30 percent respectively.
Some activities of the last caretaker government created panic among the businessmen, particularly the big ones along with the industrialists, they said, adding that many of them fled the country or went into hiding to evade harassment of various types.
“Many industries closed down, or became sick as they could not maintain normal production due to the reasons,” the BB official noted.
The Bangladesh Leasing and Finance Companies Association (BLFCA) will seek clarification from the central bank about implementation of the directive relating to reschedule of the said loans.
“We’ll request the central bank to clarify how to collect confirmation of the clients’ predicament during the period,” BLFCA Chairman Mafizuddin Sarker told BNN in Dhaka.
Mr. Sarker also said they cannot understand what type of relaxation will be applicable while rescheduling such loans.
On December 21 last year, commercial banks have been empowered to reschedule classified loans of the industries that were forced to close down or became sick during the last caretaker government without any down payment.
The central bank on December 6 extended both coverage and duration of the loan rescheduling facility for recession-hit export sectors without any down payment.
Instead of only five specific ones, all export-oriented sectors will now be entitled to the facility until June 30 this year.
Besides, the BB has allowed the commercial banks to reschedule their agricultural credits as long-term loans to help farmers across the country.
“There is a scope of rescheduling the short-term agricultural loans, which will be treated as long-term ones after making required down payment,” the central bank said in a circular earlier.
BBN/SS/SI/AD-15January10-1:53 am (BST)
