Moratorium on loan repayments extended until December 31

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Such loans would not be considered classified if borrowers repaid 25% of their installments within this timeframe.

TBS Report

August 27, 2021, 8:00 p.m.

Last modification: Aug 28, 2021, 12:50 p.m.

Bangladesh Bank File Photo: Salahuddin Ahmed / TBS

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Bangladesh Bank File Photo: Salahuddin Ahmed / TBS

The Bangladesh Bank has extended the current moratorium on the repayment of loan maturities until December 31 of this year in response to a request from businessmen.

Borrowers would have an additional four months to repay all types of loans, including ongoing and term loans, a circular issued by the central bank’s banking policy and regulation department said Thursday.

But, the central bank has increased the amount of the minimum payment to 25% from the existing 20%.

The circular states that these loans will not be considered classified if borrowers repay 25% of their installments by December 31. In this case, the beneficiaries of the loan must repay the remaining installments in the following year.

Central bank officials say the second wave of Covid-19 has severely affected the country’s trade and commerce. The Bangladesh Bank has extended the loan repayment period in response to a demand from businesses.

Interest or profits on loans or investments under the moratorium will be considered paid.

Bangladesh Bank officials said instructions would be issued later on transferring interest on loans to the income sector and keeping provisions against loans.

Due to Covid-19, loan classification has been suspended, preventing customers from defaulting. This year, the facility was granted on the basis of a bank-client relationship.

As the second wave of Covid hit this year, the Bangladesh Federation of Chambers of Commerce and Industry (FBCCI) recently wrote a letter to the central bank governor demanding an extension of the deadline until December of this year.

The Chattogram chamber also sent a letter to the governor expressing the same request.

However, despite the benefit of non-payment of loan maturities, the amount of overdue loans has not decreased.

On the contrary, default loans stood at Tk 99,205 crore at the end of June of this year, an increase of Tk 5,000 crore over March of this year.

The overdue amount is 8.14% of the total loans disbursed.


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