Monday, September 25, 2023

BB juggling with loan rescheduling continues

Relaxes regulations again
Bangladesh Bank on Wednesday relaxed the regulations for loan provisioning and rescheduling for the fifth time ahead of the general elections amid pressure
from scheduled banks and businesspeople.
According to two revised circulars issued by the BB, from now on, the scheduled banks do not need to keep provision against their loan category of special mention account.
Besides, the BB has increased the time-frame of loan rescheduling for term loan, farm loan and microcredit.
The time-frame of loan rescheduling for term loan has been increased to six years from four years and that for farm loan and microcredit to five years from three years and six months.
BB deputy governor SK Sur Chowdhury unveiled the two revised circulars on the day at a news conference at the central bank headquarters in the capital.
He said that the BB had been compelled in changing the master circulars due to the ongoing instability in the country’s socio-economic situations.
The BB had issued two master circulars on June 14, 2012 where it said that the banks had to keep five per cent provision on mandatory basis against the SMA category loan.
According to the revised circulars, the banks do not need to keep provision separately against the SMA loan.
For this reason, the banks will keep provision against the SMA loan like as standard loan.
The banks now keep 0.25 per cent provisioning for standard category of small and medium enterprise loan, five per cent for consumer loan, two per cent for housing, merchant bank, brokerage house and stock dealer loan.
According to the BB regulations, the loan will be treated as SMA if any instalment or interest of the loan is not paid during two months by the borrowers.
An SMA loan is considered as initial stage of a classified loan.
Sur said the banks would be able to keep Tk 500-crore surplus due to the
revised circular for loan provisioning.
The BB has fixed 36 months, 24 months and 12 months to reschedule a term loan in three times separately from 24 months, 18 months and 12 months respectively.
Sur said from now on, a businessman would get
six years to reschedule a
bad category of term loan from four years and six months.
The BB has fixed two years and six months, one year and six months and one year to reschedule a farm loan and term loan in three times separately from two years, one year and six months.
A BB official told New Age that the BB had changed the circulars due to pressure from the banks and businessmen.
The defaulted loan in the last few months increased significantly resulting that the banks have to keep a large amount provision which has already hit their net profit, he said.
Under the circumstances, the banks requested the BB to relax the provision against the SMA loan.
Sur said an instable situation had recently created in the industrial sector due to the political unrest
and shortage of gas and electricity.
‘The businesspeople are now facing a production crisis due to lack of power shortage. Many of them have turned into defaulted. The BB has relaxed the regulations considering the matters,’ Sur said.
When asked why the BB has backtracked from its strain stance on defaulted loan, he said that it was just adjustment considering the present condition. It cannot be called backtracking, he added.
The BB has revised the circulars considering the national interest, he said.
Asked whether the government had put pressure on the BB for revising
the regulations in its last stage of five-year tenure, he said that the BB had taken the steps on its own considerations.
After issuing the two master circulars on June 14, 2012, the BB had revised the circulars on June 18, on July 19, on September 24 and December 27 of 2012.

-With New Age input

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