BB extends loan moratorium

Borrowers who were unable to repay their loan installments by June 30 can now pay by August 31 as Bangladesh Bank (BB) has extended the deadline considering the negative impact of the Covid-19.

"If 50 per cent of payable installments against loans/lease/advance are paid by August 31, such loans/leases/advances cannot be made classified," said the central bank in its circular on Monday.  

In such cases, balances of the payable installments until June, 2021 will have to be paid with the last installments, BB said, adding that other installments will have to be cleared timely.      

Other directives on payment of installments against loans/leases/advances will remain unchanged, it said.  

The measure of shifting the June 30 deadline was taken considering the negative impact of coronavirus on the country's economy, said the central bank in another circular on July 5.

Earlier, the central bank said Bangladesh business has been facing negative impacts due to Covid-19. The central bank has taken the decision considering the negative impact of coronavirus on the country’s overall economy, financial losses of the borrowers and the repayment of their loans in time.

It said the working capital loans, whose repayment periods have already been expired, will be treated as regular loans till June 30 of 2022 if the borrowers pay their unpaid interests every quarter.

The interest of the working capital loans of last year, the repayment periods of which have already been expired, can be paid within June 2022 in six quarterly installments.

Borrowers of demand loans will be able to repay their loans in eight quarterly installments from March this year to December 2022.

The lenders cannot downgrade the loans if borrowers have paid their quarterly installments, the BB said.

In March this year, the central bank allowed bank borrowers to repay their due loan installments based on the banker-customer relationship because of the resurgence of the Covid-19.

Since January, 2020 banks have stopped classifying loans in the event of failure to repay loan installments under instructions from the BB. Borrowers have been allowed to clear their installments on continuous, demand and term loans based on the banker-customer relationship.

"We've relaxed the policy to help the businesses overcome the damaging effect of the second wave," said a central bank official earlier.

Under the policy of relaxation, unpaid interest for 2020 on continuous loans would have to be cleared in six quarterly installments from March 2021 to June 2022.

Such continuous loans would not be considered as classified until June 2022, if the borrowers would clear unpaid interest on the loans with quarterly installments, said the central bank.