Loan rescheduling facility extended to 30 Nov, 'exit' borrowers to get immediate loan-status upgrade
The Bangladesh Bank has introduced major changes to the exit facility, offering significant relief to borrowers.
The Bangladesh Bank has extended the deadline for rescheduling classified loans – taken by borrowers whose businesses were harmed by factors beyond their control during the Sheikh Hasina administration – allowing them to restructure their loans for 10 years with only a 2% down payment.
According to a new circular issued yesterday by the Banking Regulation and Policy Department, the deadline has been pushed to 30 November, instead of the previously announced 30 June.
The central bank has also extended the timeframe for special loan restructuring, which was earlier limited to June this year. Under the new circular, the deadline has been extended to 31 December.
Keep updated, follow The Business Standard's Google news channel
Exit facility eased
The Bangladesh Bank has introduced major changes to the exit facility, offering significant relief to borrowers.
Under the previous rule, even if an exit period of four years was approved, the borrower remained classified during the entire exit period. The borrower could repay the dues in instalments or in a lump sum at any point during those four years, but their loan status did not improve until full repayment.
However, Bangladesh Bank has now changed this rule.
Now, once a borrower opts for the exit facility, their loan status will be upgraded, similar to what happens after a rescheduling. This means the borrower will no longer remain on the defaulters' list.
However, the central bank has tightened repayment discipline.
The new circular notes that earlier, many borrowers who opted for exit facilities would repay the entire amount in a single payment after four years. That will no longer be allowed.
Under the new rules, the borrower must repay in quarterly instalments, and the annual repayment must not fall below 20% of the outstanding amount. If the borrower fails to pay the instalment for any three-month period, they will again be marked as a defaulter.
The circular also states that although borrowers under the new exit scheme cannot receive new funded loans, they will still be eligible for non-funded facilities, such as opening Letters of Credit (LCs).
Speaking to TBS yesterday, Md Touhidul Alam Khan, managing director and CEO of NRBC Bank, welcomed the Bangladesh Bank initiative, saying, "I believe this effort will contribute significantly to reducing non-performing loans in the banking sector. Importantly, regular customers will also have the opportunity to restructure their loans under this circular."
"Banks can leverage this circular to enhance banker–customer relationships and develop exit plans that benefit both parties. Overall, this is a commendable initiative by Bangladesh Bank that promotes financial health and stability," he added.
