Business Report :
In a move aimed at stabilizing the banking sector, the Bangladesh Bank has rolled out a new exit policy allowing defaulted borrowers up to three years for loan repayment with a 10 per cent down payment.
This initiative seeks to maintain liquidity flow and reduce toxic loans in the banking system.
This new exit facility is distinct from debt rescheduling or restructuring. Borrowers taking advantage of this policy will be ineligible for new credit until their existing loans are fully repaid.
Banks will have the flexibility to determine the repayment schedule, allowing borrowers to clear their dues through multiple installments within the three-year period.
Prior to this policy, banks followed varied criteria for loan collection and adjustment.
With this standardized approach, defaulting borrowers will remain classified as defaulters until their loans are fully repaid.
Banks will annotate the exit status next to these customers’ classifications in the Credit Information Bureau.
The policy is designed to benefit all types of borrowers, both small and large, regular and defaulting.
It applies in cases where a project or business is closed due to uncontrollable reasons or by the borrower’s decision.
Applications for the exit facility will be processed within 60 days, and the approval must come from the bank’s board of directors. However, bank management can grant the facility for loans up to Tk10 lakh.
Under this policy, interest can be waived according to the central bank’s guidelines.
If the loan is not repaid within the stipulated time, the waived interest will be reinstated, and the exit facility will be cancelled. The central bank’s instructions will be followed in the recovery of the debt.
Proper provisions must be maintained against the loan, and the security taken cannot be released before the loan is fully adjusted.
However, loans can be adjusted by selling the mortgaged property, with customer-negotiable loans against the bank.
As of March 2024, the total amount of disbursed loans in the banking sector was nearly Tk16.41 lakh crore, with over Tk1.82 lakh crore becoming defaulted, which is 11.11 per cent of the total disbursed loans.
In 2019, the central bank issued a special policy for a one-time exit for customers with loans over Tk500 crore, allowing repayment over ten years with a one-year grace period and a 9 per cent simple interest rate with a 2 per cent down payment.