BB Issued Circular Regarding Not to Enhance Moratorium Due to Covid

The loan moratorium facility to cushion the Covid-19 fallout ended on 1 January this year, resuming the classification of loans. The central bank's Banking Regulation and Policy Department (BRPD) issued a circular during this regard Sunday.

Due to the pandemic, borrowers didn't need to repay loan installments from January to December 2020, and loan classification was paused. Though the moratorium has ended, the Bangladesh Bank has relaxed the repayment of term loans.

Borrowers for term loans will get 50% extra time to repay the installments till January 1, 2021, said the financial institution circular. But the extended period won't be quite two years, and therefore the bank-client relationship will determine the extension.

For instance, a loan with a six-year repayment period finishes two years on 1 January 2021, and has four years for repayment. For it, the borrower now gets six years – the remaining four years plus another two years as 50% of the four years.

Another loan with 10 years crosses five years of the repayment on 1 January 2021, and has five years for repayment. consistent with the central bank's circular, 50% of the remaining period is two-and-a-half years. Since the extension won't be quite two years, borrowers won't get seven-and-a-half years, instead, the client will need to repay the loan in seven years.

Syed Mahbubur Rahman, former chairman of the Association of Bankers, Bangladesh and also the present director and CEO of Mutual Trust Bank Limited, welcomed the central bank's decision.

"This facility will help industry and repair sectors rotate , shrugging off the pandemic-led challenges. The client-bank relationship, in availing the power , will deter wilful defaulters from taking advantage," he noted.

Rizwan Rahman, president of the Dhaka Chamber of Commerce & Industry (DCCI), welcomed the central bank's move. But he advocated for continuing the loan moratorium facility for subsequent six months.

"The pandemic isn't over, and therefore the fallouts are likely to prevail this year too. it'll be convenient for us if the loan moratorium is extended," he added. The baron is particularly in favour of extending the power for the cottage, micro, small and medium enterprise sector. He said the power for the world should continue throughout 2021. He thinks small and medium ventures should get more six months for repaying their installments.

In the half-moon of the present fiscal year (July-September), the quantity of term loans disbursed to industries was about Tk15,500 crore – which is 30% but the corresponding quarter of the previous year.

The central bank's circular further said credits aside from the term loans will follow the prevailing policies and stimulus package guidelines.

Source: The Business Standard 

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