State own banks seek continue 2% rescheduling facility for some more months on Covid-19.

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State own banks seek continue 2% rescheduling facility for some more months on Covid-19.

Managing Directors & CEOs of most of the state-owned banks who are setting separate strategies how to overcome the negative impact of Covid-19 pandemic are requesting the ministry continue 2 % rescheduling facility for some more months.

They said many leading businessmen couldn’t avail the facility for some trifle reasons. If they get change again they could continue their business as well the banks would reduce numbers of classified loans.

“It will significantly help improve bank’s loan flow. Those entrepreneurs who avail the 2% interest rescheduling facility will easily can get more loans,” Md Abdus Salam Azad, Managing Director/CEO at Janata Bank Ltd told Senior Secretary to Financial Institution Division in a recent meeting.

He said the facility will open up making many laid-off factories to continue their operation a life line.

Basic Bank Managing Director Md Rafiqul Alam said if the opportunity resumes, it will significantly help bank like Basic help continue operation who have been struggling for classified loan.

“I don’t know whether we would get the opportunity again but if it resumes it will significantly help Basic Bank, Mr. Rafiqul added.

The Bangladesh Bank’s circular, offered loan defaulters the rescheduling of classified loans with a 2% down payment at a 9% interest rate, and a 10-year payback period, including a one year grace period.

The government has taken the loan rescheduling initiative with a view to reducing defaulted loans that accounted for 11.69 per cent or Tk 1,12,425 crore of the banks’ Tk 6,92,077.26 crore outstanding loans, but the policy drew huge criticisms from different quarters.

As per the new policy, the defaulters will be allowed to reschedule their classified loans by making a down payment of only 2 percent instead of the existing 10-50 percent. A maximum 9 percent interest will be charged on the rescheduled loans while the existing interest rate is 12-16 percent. Besides, the tenure for repayment is 10 years with a grace period of one year.

Five state-owned banks, mired in huge amounts of nonperforming loans, have received more than 3,000 applications till Sunday for defaulted loan rescheduling under a government-announced special rescheduling facility.

The special loan rescheduling policy also facilitated settlement of defaulted loans under ‘one time exit’ scheme, allowing the defaulters to enjoy interest waiver for the preceding period of rescheduling.

Janata Bank received 700 applications for rescheduling of around Tk 10,000 crore in defaulted loans.

Rupali Bank received around 400 applications for rescheduling of over Tk 700 crore, BASIC Bank received 520 applications and Agrani received more than 300 applications since the introduction of the politically-motivated facility by the BB.

Of the five banks, Janata has been suffering from defaulted loans worth Tk 19,523.04 crore, which is 42.96 per cent of its outstanding loans, and Sonali has been suffering from defaulted loans worth Tk 11,892.45 crore, which is 29.46 per cent of its outstanding loans.

 

The government has taken the loan rescheduling initiative with a view to reducing defaulted loans that accounted for 11.69 per cent or Tk 1,12,425 crore of the banks’ Tk 6,92,077.26 crore outstanding loans, but the policy drew huge criticisms from different quarters.

Most of the private banks have adopted a cautious strategy to deal with applications for such facility while a section of them completely refrained from entertaining the facility to their clients, officials said.

Although the government was optimistic about the outcome of the policy, experts and bankers have warned that the policy would impact adversely on the banking sector by the way of demoralising good borrowers and encouraging good borrowers to follow the culture of non-payment of banks’ money.

Bmirrorhttps://bmirror.net/
businessmirror20@gmail.com

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