Reza Mahmud :
Large borrowing companies are seeking loan restructuring, with many of them being habitual defaulters, according to insiders at Bangladesh Bank. Economists have warned that restructuring loans for these major defaulters could limit the ability of banks to lend to small and medium-sized enterprises (SMEs).
Sources have revealed that around 63 large companies have applied to the central bank for loan restructuring, citing losses caused by factors beyond their control.
The defaulted loans range from Tk150 crore to Tk12,500 crore, with most applicants seeking restructuring terms of up to 15 years, according to central bank officials.
Economists argue that large borrowers, particularly those who are habitual defaulters, should not be granted further chances for loan restructuring, as this could have a detrimental impact on the national economy.
In an interview with The New Nation on Sunday, eminent economist and former banker Prof. Muhammad Mahboob Ali stated, “These large borrowers are identified as habitual defaulters.
The central bank must be strict on this matter and should not allow the restructuring of loans for such companies.”
He added, “These big players create barriers for small and medium-sized entrepreneurs to access loans, which is severely harmful to the national economy.”
In January, Bangladesh Bank established a five-member committee to recommend policy support for distressed borrowers, aiming to restore their operational viability and ensure loan recovery. Banks were directed to submit proposals for restructuring loans for borrowers who defaulted due to external shocks.
Initially, only genuine defaulters with loans exceeding Tk50 crore as of 30 September 2023 qualified, but the policy was later expanded to include financially stressed non-defaulters.
Distress causes recognised by the committee include the Covid-19 pandemic, the Russia-Ukraine war, the global economic slowdown, natural disasters, and political instability. By 25 March, 30 banks had submitted proposals for 60 clients.
While most applications were routed through banks, a few were submitted directly to the central bank and then forwarded to the committee.
Over 10 applications are currently under review, with notable applicants including Beximco Pharma, JMI Group, and Abdul Monem Ltd.
A committee member noted that while some applicants are habitual defaulters, others are reputable firms, with more than half having previously rescheduled loans.
Many have cited political instability, currency depreciation, and exchange rate losses as major challenges-particularly where government payments remain fixed at older exchange rates while loan repayments are based on current, higher rates.
The committee is considering whether losses from exchange rate fluctuations could be repaid separately over time. While Beximco Pharma is not a defaulter, it has applied for restructuring to avoid operational disruptions caused by group-level challenges.
JMI Group is seeking to restructure Tk2,000 crore in defaulted loans, while Abdul Monem Ltd is looking to restructure Tk800 crore, having already repaid 4 per cent.
Despite banks’ willingness to help, regulatory limits under the Banking Companies Act restrict the concessions that can be offered. The issue has been referred to the Ministry of Law for possible exemptions.
Each application is reviewed individually, taking into account credit history, working capital, and business viability. Priority is being given to institutions that make significant contributions to exports and employment.
On 10 March, the central bank extended eligibility to include borrowers who defaulted after 30 September or those under financial strain. Priority will go to those who have rescheduled loans three times or fewer, and repayment plans must reflect actual cash flow. Applications are due by 30 April.
As of December, defaulted loans in the banking sector had risen sharply to Tk345,765 crore-20.2 per cent of total disbursed loans-an increase of Tk60,787 crore in just three months.
