Loan moratorium may be extended further

The central bank is considering whether to extend the deadline for non-payment of loan installments in response to a request from businesspeople.

It said the decision will be made considering the coronavirus situation, losses in business, and conditions of banks.

"We are reviewing applications being submitted by various parties," Serajul Islam, spokesperson and executive director of the central bank, told The Business Standard.

"Besides the loss to businessmen, the condition of banks also has to be considered. If the facility of non-payment of installments is extended, then businessmen will not get new loans. We also have to bear that in mind."

He said that after considering all the aspects, if it seems that the deadline for non-payment of installments should be extended, then that will be done.

Due to the outbreak of coronavirus, the central bank had made available the facility of non-payment of loan installments throughout last year. This year the facility has been given on a loan basis but not for all. Initially, this facility was given till March but later it was extended to 30 June.

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) recently wrote a letter to the central bank governor demanding an extension of the deadline to December this year.

The Chattogram chamber has also sent a letter to the governor voicing the same demand.

Bankers say that in the midst of the second wave of coronavirus, many borrowers are repaying their regular loan installments. On the other hand, borrowers who had not been paying the loan installments intentionally from earlier borrowings are currently availing the benefits.

Mohammad Shams-Ul Islam, managing director of Agrani Bank, told TBS that the debt collection situation was not so bad in the midst of the second wave of the Covid-19. His bank has recovered 15% more loans than last year.

He said, though, that it was a matter of regret that there are many sectors – coronavirus protective product manufacturers and pharmaceuticals – that have done good business during the pandemic but they are taking advantage of the non-payment of installment facility.

Therefore, he said, the central bank needs to review carefully the issue of an extension of the facility of non-payment of installments or the possibility of deferred payments.

Noting that many businessmen have suffered, he said decisions need to be taken to benefit both businesses and banks.

Sohail RK Hussain, a member of the Association of Bankers Bangladesh (ABB) and managing director of Meghna Bank, said that in the circumstances, the facility of paying half or a quarter of installments can be given.

He told TBS that there was no doubt that businessmen had suffered. Again, many businesses are paying installments in these difficult times. Many are paying half or more if they cannot pay the full amount.

The banker is of the opinion that the decision has to be made keeping in mind how the coronavirus situation has affected businesses. He said ABB had not yet had a discussion about the demand of businessmen. They could meet next week, he added.

It is to be noted that despite the benefit of non-payment of loan installments, the amount of defaulted loans has not decreased. On the contrary, bank defaults stood at Tk95,085 crore at the end of March this year, an increase by Tk6,000 crore from that of December last year. The defaulted amount is 8.07% of the total loans disbursed.