BB tightens loan rescheduling guidelinesStaff Correspondent
Bangladesh Bank on Thursday brought changes in the credit management guidelines, tightening the unabated rescheduling of all kinds of classified or default loans.
The move came amidst allegation of widespread loan rescheduling by defaulters and influential business people using political links.
The BB asked banks not to reschedule default loans for more than three times as the existing facility of rescheduling of loans for unlimited times created huge scope for embezzlement, said officials of the central bank.
The BB in a circular issued to managing directors and chief executive officers of all commercial banks said that the banks could not change the time duration of repayment of the loans after rescheduling.
There are three types of classified loans—sub-standard loans, doubtful loans and bad loans.
The BB circular said from now on, if any defaulter fails to pay instalment of any loan between three and six months, the loan would be considered as sub-standard loan. Earlier, the time duration was six to nine months.
For doubtful loans, the time duration is between six and nine months instead of earlier nine and 12 months.If any defaulter fails to pay instalment for nine or more months it would be classified as bad loan.
The circular, however, said the short-term agricultural and micro-credit loans would be considered as ‘irregular’ if not repaid within the due date as stipulated in the loan agreement.
If the irregular status continues, the credit will be classified as ‘sub-standard’ after a period of 12 months, as ‘doubtful’ after a period of 36 months and as ‘bad or loss’ after a period of 60 months from the stipulated due date as per the loan agreement, the circular said.
A BB official said the agriculture and micro-credit loans would be kept in a relax condition for the greater national interest.
For the bad loans, the banks would have to reschedule the fixed-term classified loans for the first time within maximum nine months from the expiry date, the circular said.
The banks would reschedule the fixed-term classified loans within six months from the expiry date of first rescheduling.
For the third or last time, the loan would be rescheduled within three months from the expiry date of second rescheduling, the circular said.
Likewise, the BB has fixed separate time duration for rescheduling of sub-standard loans and doubtful loans.
Another BB official told New Age that a number of businessmen in the country had not repaid the bank loans, as a result the classified or default loans in the banking sector had increased to Tk 25,289 crore, or 6.57 per cent, of the total outstanding loans as of March 31.
Moreover, the clients had rescheduled their classified loans repeatedly to take part in the national or local government elections or to receive another bank loan, he said.
In this process, a number of officials of commercial banks including state-owned banks were involved to reschedule the loans through manipulation, he said.
The central bank issued the circular to curb manipulation in rescheduling default bank loans.
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