Borrowers won’t be defaulters if they pay 15pc loan: BB

Borrowers will not be declared defaulters if they pay 15 percent of the overdue loan amount in 2021, the Bangladesh Bank said Thursday.

The decision was taken after a meeting between the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) and Bangladesh Bank.

FBCCI President Md Jashim Uddin met BB Governor Fazle Kabir with leaders of several trade organisations. 

Faruque Hassan,  president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), AKM Salim Osman, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Anwar-Ul Alam Chowdhury (Pervez), president of Bangladesh Chamber of Industry (BCI), and Alamgir Shamsul Alamin, president of REHAB, were also present at the meeting.

On Wednesday, BB issued a notice allowing banks to keep CMSME sector loans unclassified if the borrowers clear 15 percent of the overdue amount for the January-December period of this year.

The federation leaders sought an extension of the moratorium deadline and called to relax the repayment facilities.

“Business leaders placed a set of demands including a six-month extension of moratorium facilities and augmenting the amount of loan from Export Development Funds (EDF),” BB spokesperson Serajul Islam told reporters after the meeting.

In response to their call, BB decided not to declare borrowers defaulters if they pay 15 percent overdue loan amount regardless of business size, said Islam.

He said other demands of the business communities would be reviewed and would be considered.

In August, the regulator allowed banks to keep any loans unclassified against recovery of 25 percent of the overdue amount within December 31 this year. The regulator also allowed banks to realise the entire year’s interest on CMSME loans in their income accounts if such loans remain unclassified.

A separate notice, issued by the central bank on the same day, asked banks to keep aside 1.5 percent additional provisions against CMSME loans, instead of the existing 2 percent. The additional 2 percent provision requirement against other loans will remain unchanged.

Previously, the regulator asked banks to keep an additional 2 percent provision against all sorts of loans in addition to the existing regular provisions.