The International Monetary Fund (IMF) has said that it will tighten the default or loan classification policy. The organization has suggested that a policy be made that defaulted loans cannot be repaid immediately after availing the facility.
An interim review meeting of the IMF with Bangladesh Bank was held on Thursday (December 12). Among other issues, the meeting discussed the issue of loan classification.
Bangladesh will receive the fourth tranche of money from the International Monetary Fund (IMF) under the ongoing USD 4.7 billion loan program. A 10-member IMF team arrived in Dhaka on December 4 to review the third tranche before releasing the fourth tranche. The team will hold meetings with Bangladesh Bank, the Finance Department of the Ministry of Finance, the National Board of Revenue (NBR) and various related organizations for two weeks.
A concerned official of Bangladesh Bank said that after availing the facility of defaulted loans, banks are repaid the loans immediately. International practice is not being followed in this regard. Therefore, the IMF has asked to issue a notification by amending it in light of the Basel-3 policy as soon as possible.
However, the organization has praised the recently published policy on the classification of loans by Bangladesh Bank. The notification states that if a loan is not repaid within the specified period, it will be considered overdue. After that, if the loan is unpaid for more than 90 days, it will become a default.
As a result of this policy, there is a fear of increasing defaults in the banking sector. At the end of last September, the default record stood at Tk 2,84,977 crore
Earlier, in a meeting with Bangladesh Bank on Tuesday, the IMF had sought fluctuations in the price of the dollar to increase supply in the market.
Earlier, on December 3, the Monetary Policy Committee of the central bank also suggested getting out of the crawling peg system of the exchange rate and introducing a completely market-based exchange rate, reviewing the foreign exchange system and modernizing it, and lifting any remaining restrictions on imports.
The loan program with the IMF began on January 30, 2023. So far, Bangladesh has received three tranches of money. On February 2, 2023, Bangladesh received the first tranche of $476.3 million from the IMF. Last December, it received the second tranche of $681 million. And last June, it received the third tranche of $1.15 billion. Bangladesh has received about $2.31 billion from the IMF in three tranches. The remaining $2.39 billion of the loan will be available in four tranches, one of which may be available this December.
