Bangladesh Bank has provided new special policy support for the business recovery and financial restructuring of distressed and troubled borrowers.
A notification issued by the Banking Regulations and Policies Department (BRPD) on Monday has given an opportunity to bring defaulted loans under rescheduling till November 30 of this year.
The notification says that all defaulted loans that are impaired or unpaid till November 30 can be rescheduled for a maximum period of 10 years.
Within this, a maximum grace period of two years can be provided. As a result, institutions that are already in default are once again getting special facilities.
Unclassified term loans—including previously rescheduled loans—can be extended for an additional two years beyond the previous policy in these cases.
For this, this special facility will be applicable in addition to the period specified in the circular.
In addition, some relaxations have been brought in for the implementation of exit facilities for banks.
As per the previous guidelines, there will be an option to extend the exit facility for another year after receiving the down payment.
Although it is mandatory to repay in monthly or quarterly installments, at least 20% of the loan will have to be repaid annually.
During this period, the loans will be classified as “Exit” and the necessary general provisions will have to be maintained.
However, the specific provisions made earlier without actual realization cannot be considered as income.
The notification further states that if three consecutive monthly or one quarterly installments are failed to be paid under the exit facility, the loan will have to be classified as normal and full provision will be mandatory.
Moreover, no new loan can be approved in the name of the concerned institution until the loan is fully repaid.
According to experts, while the new policy provides some flexibility for banks to recover problem loans, such facilities can increase credit risk in the future without proper supervision.
They urged to ensure strict monitoring and implementation at the implementation stage.
