Many of the bank loan borrowers are facing trouble repaying instalments trying to overcome the negative impact on business amid the Covid-19 crisis.
Reports say that the country’s banking sector is in dilemma over recovery of loans disbursed under the stimulus packages as the large borrowers, affected by Covid-19 pandemic, have sought extension of repayment time till December 31 this year.
Sources said if banks do not extend time for repayment of loans, the number of defaulters will increase and at the same time, non-collection of loans will reduce the income of banks that will also affect their investment capacity.
Earlier, Bangladesh Bank (BB) had extended the loan repayment period for two times. The central bank first extended time for loan instalments up to June 30 instead from March 2021 on the basis of banker-customer relationship. Considering the Covid-19 crisis situation, BB extended the repayment period by two more months to August 31 from June 30.
"Bangladesh Bank has relaxed its loan classification policy considering the adverse effects of the second wave of the pandemic on businesses," said a BB official.
According to the central bank, three categories of loans — term, demand, and working capital — are allowed to enjoy the lenient facility.
As per the latest circular of BB, borrowers will be able to avoid falling into the defaulted category by repaying 20 percent of their loan instalments as of August 30.
Recently, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has sought more time for businesses to repay loans disbursed under the stimulus packages by the government to support following the outbreak of Covid-19 in March, 2020.
In a letter to the governor of Bangladesh Bank the apex trade body requested the extension of the loan-term facility till December 31 to help businesses overcome the impact of Covid-19.
According to FBCCI, most industries and businesses have not been able to repay their loan instalments on time due to disruptions induced by the second wave of the pandemic.
However, bankers are against further extension of repayment deadline, saying that such extension would affect their (bank) business. If they fail to collect loan instalments, their income will fall creating a long negative impact on their earnings as well as reallocation of credit to new clients, said a top official of a private bank.
According to the Association of Bankers, Bangladesh (ABB), Due to the complicacies, large borrowers are not able to repay the loan now and they want time from Banks. But according to the policy, business person will get only one year but many want two years or more.
ABB source said discussions are going on with both about the issue.
BB took the responsibility of implementing the government's nine major stimulus packages along with its own three stimulus packages amounting to around Tk 1,09,000 crore for overcoming COVID-19 related disruptions, more than 85.6 percent of which are already implemented as of end of June 2021.
