Free from default loans by paying minimum 25 percent: Bangladesh Bank

Central Bank has given special facility of exemption from default to customers of Non-Banking Financial Institutions or NBFIs. By paying 50 percent of the loan installments, the customer can regularize the debt. In this case, the customer's cash flow is closely reviewed to provide this facility. The facility has been given in light of the recent resurgence of Covid-19 infections and several districts, including the north and north-eastern parts of the country, affected by floods. A notification in this regard has been issued by the Financial Institutions and Markets Department of the Central Bank on Tuesday.

First of all, Bangladesh Bank gave an opportunity to get rid of defaulted loans by paying a minimum of 25 percent of loan installments in 2021 due to Covid. According to the new notification, there has been a resurgence of Covid-19 infections recently and several districts, including the North and North-Eastern parts of the country, have been hit by floods. In this situation, a decision has been taken regarding the transfer of the debt and classification of financial institutions and the interest or profit charged to the income sector till December 31 of the current year.

At the end of each quarter of the financial year 2022, if at least 50 percent of the receivables of the loan or investment account are collected by the last working day of the quarter, the debt can be shown as unclassified or defaulted. However, the customer's cash flows are carefully reviewed and only the beneficiaries can be benefited based on the financial institution's customer relationship.

In the case of loans disbursed to CMSMEs and agriculture sector in flood affected areas identified by the Ministry of Disaster Management and Relief, at the end of each quarter of the financial year 2022, the loan cannot be classified as impaired if at least 50 percent of the recoverable amount is within the last working day of the quarter. But the financial institutions will ensure on their own initiative whether the users are actually affected by the flood or not.

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Concessional loans, leases and investment accounts under this direction shall not be charged penalty interest or additional fee and charge commission (by whatever name) during the period from 1st April to 31st December of the current year.

Failure of any loan, lease and investment borrower to make payment as per this policy within the last working day of each quarter shall be reported to the CIB by proper categorization of the respective loan, lease or investment account. The interest or profit charged on the loan account can be transferred to the income sector subject to actual realization.