Bangladesh Bank extends relaxation of loan classification policy

The Bangladesh Bank has further extended the relaxation of its loan classification policy given the ongoing business slowdown brought on by the coronavirus pandemic.

As per the Bangladesh Bank decision, borrowers will be able to avoid default zone by repaying 25 per cent of their loan instalments until December this year.

The rest of the funds of the instalments will have to be paid within the next year.

The central bank issued a notice on August 26, asking them to follow the instruction such that the beleaguered businesses would get breathing space from the ongoing slowdown.

On June 27, the central bank said that borrowers could avoid default zone by repaying 20 per cent of their loan instalments till June 30.

The previous notice also said that borrowers would have to give a portion of their loan instalments by August this year.

The central bank has further extended the relaxed policy on the loan classification as a good number of trade organisations requested the banking regulator to continue the easing policy due to the slowdown.

In addition, default loans in the banking sector have also started to go up since the first quarter of this year as the central bank withdrew the moratorium facility.

Borrowers enjoyed a yearlong moratorium facility throughout last year.

Non-performing loans (NPLs) stood at Tk 99,205 crore in June, up 11.80 per cent from six months earlier and 3.21 per cent year-on-year, data from the BB showed.