BB won’t extend relaxed loan policy despite FBCCI plea 

The Bangladesh Bank today decided not to extend the tenure of the current relaxed policy on loan classification despite pleas from the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

The deadline expires on December 31.

The central bank came up with the decision at a bankers' meeting at the BB headquarters in the capital, said Md Serajul Islam, a spokesperson and an executive director of the BB.

Governor Fazle Kabir presided over the quarterly meeting with the managing directors in the banking sector.

As per central bank rules, borrowers will not be considered defaulters if they repay 25 per cent of their total instalments payable in 2021.

The BB, however, slightly relaxed the rules for the businesses in the small and medium enterprise segment, Islam said.

SME clients can avoid falling into the default zone if they provide 15 per cent of the instalments.

The central bank has recently said that banks would have to keep an additional 2 per cent provision against the loans that would avoid the default zone on the back of the relaxed policy.

Lenders are permitted to keep 1.5 per cent provision against SME loans.

The FBCCI, the apex trade body of the country, requested the BB to extend the tenure of the relaxed policy on loan classification to June next year.

As per a proposal from the FBCCI, borrowers, who have taken loans of up to Tk 10 crore from banks, should be treated as non-defaulters even if they are unable to pay any instalment.

Clients, whose outstanding loans ranged from Tk 10 crore to Tk 500 crore, should be considered as non-defaulters if they can give only 2 per cent of their payable instalments.

Those with more than Tk 500 crore loans should be allowed to avoid the default category if they can pay 1 per cent of the payable instalments, according to the proposal.

BB Governor Kabir also asked banks to provide compensation to all bank employees, who died from the complications related to Covid-19, within a week.

Some 186 employees in the banking sector died of Covid-19. Of them, 55 are yet to receive any compensation from their banks.

The special compensation ranges from a minimum of Tk 25 lakh to a maximum of Tk 50 lakh.

Kabir also asked banks to raise the salary of assistant officers as their pay is low given the cost of living.