Fresh loan rescheduling policy for troubled businesses

Bangladesh Bank has launched a guideline for banks to provide loan rescheduling facilities to businesses impacted before last July's movement due to foreign exchange losses, energy shortages, and repression by the previous government.

Recently, the central bank approved a mega loan rescheduling facility for some 250 companies, including some of the country's biggest corporate defaulters, in an attempt to boost business activity amid slowing economic growth.

After that, many other entrepreneurs rushed to the BB to get the same rescheduling benefits.

From this perspective, the regulator issued the guideline so that commercial banks could provide the benefits upon fulfilment of certain requirements.

Under the benefits, banks can allow repayment tenures of classified loans to be extended to 10 years, with a down payment of at least 2 percent of the existing outstanding amount on the basis of the banker–client relationship.

If the loans were rescheduled three or more times before, the down payment would be 1 percentage point higher, according to the new circular that was issued yesterday.

A preferential interest rate can be set so that the rate would be one percentage point lower than the lowest interest rate for the respective sector. The loan instalments can be on a quarterly or monthly basis.

These rescheduled loans will have to be categorised into "special mentioned accounts," and banks will have to keep general provisioning against the loans.

If a borrower fails to pay three monthly instalments or one quarterly instalment even after availing the benefit, the loan will have to be classified.

To get the special benefits, borrowers will have to apply to the lenders before December 31 this year.

Banks will have to complete their processes to decide whether they will allow the benefits or not.

Banks will not need to take approval from the central bank to provide the benefits, but they will have to get it approved through their respective board meetings.

Wilful defaulters and loans that were taken illegally will not be allowed to receive the benefits, the central bank said.

It said that to get the rescheduling benefits, affected borrowers should have the potential to secure a rebound.

Enterprises that were affected due to non-business reasons and for factors beyond their control should have operational factories.

Also, enterprises that were affected by supply chain disruptions and unexpected devaluation of the local currency against foreign exchange will be able to avail the benefits, the BB said.

To avail the benefits, enterprises that have never availed loan rescheduling and restructuring facilities will be prioritised.