Apparel assocs oppose BB’s new instructions on loan reschedulingStaff Correspondent
Business leaders from apparel and textile sectors on Wednesday demanded suspension of the new rules of the Bangladesh Bank on loan classification, rescheduling and provisioning, saying the new provisions of the rules might create instability in the sectors.
The payment of the workers’ salary and festival allowance might be at risk if the new rules are implemented at a time when the garments and textile sectors are passing through difficulty due to some external and internal factors, the leaders of the garment manufacturing and textile industry said at a joint press briefing.
Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association and Bangladesh Textile Mills Association jointly organised the briefing at the BGMEA conference room on current situation in the sectors.
Business leaders also opposed the decision of proposed price-hike of electricity at consumers’ level by 50 per cent by the Bangladesh Energy Regulatory Commission along with 32 per cent hike of gas price, saying that such untimely decision would create enormous setback for business and investment.
The central bank issued two circulars on June 14 revising its guidelines on loan rescheduling, asking the commercial banks to make a continuous loan classification for non-repayment within three months instead of six months and limit rescheduling scopes to three times with effect from July 1.
The BB set the base for provisioning at minimum 20 per cent of the outstanding balance of the loans.
BGMEA president Shafiul Islam Mohiuddin said that the central bank should have considered the impact of such rules on the country’s overall industrialisation and economy including export in the context of the ongoing local and global economic crises.
He said that the country’s export sector had been suffering due to some external factors such as Eurozone crisis and internal factors including weakness in infrastructure facility, shortage in power and energy supply, labour unrest in recent time and budgetary pressures.
All these factors hit the country’s export growth with a downtrend in recent months and if the situation continues, export sectors might have to face unavoidable disaster, he said.
The central bank’s new guidelines on loan classification and rescheduling will further hit the sectors along with creating a high risk on the payment of the workers salaries, festival allowance and operating regular financial activities of the industries ahead of the coming Eid festival, he apprehended.
Industry owners usually pay the Eid bonus by taking short-term loans from the banks but if their previous loans become classified then the banks would not sanction further loans, he said.
‘So we urge Bangladesh Bank not to implement the rules now in order to sustain the garment and textile sectors. If necessary, the issue can be placed in parliament for discussion,’ Shafiul said.
The government should also take punitive action against deliberate loan defaulter, he added.
BTMA president Jahangir Alamin said that Bangladesh Bank should either rectify or suspend the rules and wait for convenient time to implement them as the country’s export-oriented industries are passing through a difficult time.
BKMEA president AKM Selim Osman, vice-president Mohammad Hatem, BGMEA vice-presidents Faruque Hasan, Siddiqur Rahman, among others, were present at briefing.
The Federation of Bangladesh Chamber of Commerce and Industry, Bankers Association of Bangladesh and Bangladesh Association of Banks have already opposed the BB’s new instructions on loan rescheduling.
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