Staff Correspondent: Bangladesh Bank says that no companies from “major industries” will be deemed to be defaulters if they manage to repay at least half of their instalments.
For example, a company will avoid falling into the category of defaulters by repaying at least 50 percent of the loans payable for the April-June period, according to a notice issued by the central bank on Wednesday.
For SME institutions, the level will be as low as 25 percent of their instalments.
However, this benefit is only available to those entrepreneurs who have repaid their loans regularly. That means that they must not have defaulted on their instalments until April of this year to take advantage of the incentive.
Bangladesh Bank has introduced several loan incentives and policy benefits to help the economy recover from the impact of the pandemic.
A notable policy was not to penalise companies for being unable to make their loan payments. Even last year, businesses were able to avoid defaulting on their loans if they were to deposit at least 15 percent of it.
But leaders from the FBCCI, the apex business association in the country, recently met with Bangladesh Bank Governor Fazle Kabir to demand an extension for the repayment for incentivised loans, waivers for failing to repay last year’s loan instalments and an extension of default forgiveness until this December.
Following the meeting, the central bank issued a statement saying that it would make a ‘reasonable’ decision on the issue after taking the opinions of bankers into consideration.
It then announced the easing of the loan burden until February 2023 in its notice on Wednesday.
“The long-term negative effects of COVID-19 are persisting. There has been a recent rise in infections, and floods have caused extensive damage in the north and northeast of the country,” the central bank said in a statement.
“In addition, Bangladesh Bank has noticed that borrowers are having difficulty repaying the full amount of their loan instalments due to the recent war in the international arena, which has led to an increase in the price and transportation costs of various materials, including raw materials, in the international market.”
The central bank said it eased the burden of instalments to maintain economic momentum and normalise the flow of credit to the private sector.
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