The Bangladesh Bank has issued a new circular extending key deadlines and introducing major policy changes to the treatment of classified loans, aiming to provide relief to borrowers affected by circumstances beyond their control.
The deadline for rescheduling classified loans (for borrowers impacted during the Sheikh Hasina administration) has been extended from the previously announced June 30 to November 30.
This facility allows for loan restructuring over 10 years with a 2% down payment.
The timeframe for special loan restructuring, which was previously limited to June of this year, has been extended to December 31.
Old Rule: Borrowers under the four-year 'exit' period remained classified (defaulters) until the full amount was repaid, even if an exit plan was approved.
New Rule: Similar to rescheduling, once a borrower opts for the exit facility, their loan status will be immediately upgraded. They will no longer be considered a defaulter, offering significant relief.
To counter the previous practice of single, lump-sum repayments at the end of the four-year exit period, the central bank has tightened repayment requirements, borrowers must now repay the outstanding amount in quarterly installments.
The annual repayment must be at least 20% of the outstanding amount. Failure to pay the installment for any three-month period will result in the borrower being re-classified as a defaulter. Borrowers under the new exit scheme are not eligible for new funded loans. However, they remain eligible for non-funded facilities, such as opening Letters of Credit (LCs).
Md Touhidul Alam Khan, MD and CEO of NRBC Bank, welcomed the initiative, stating it will significantly contribute to reducing non-performing loans (NPLs), enhance banker-customer relationships, and promote financial health and stability in the banking sector.
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