Suspension of loan classification not to be extended soon
The central bank would make a decision on whether to extend the deadline after monitoring the situation
Even though the business community and other related parties demand that suspension of adverse classification of any loan and payment of instalments be extended further, the central bank is not going to extend the deadline anytime soon, said Abu Farah Md Naser, executive director of the Bangladesh Bank.
He said the central bank would make a decision on whether to extend the deadline after monitoring the situation.
The balance sheets of banks will be reviewed and the overall aspects including loan disbursement and default amount and instalment payment situation will be considered, he added.
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"It is a matter of time. So, a decision to extend the deadline is not coming anytime soon.
Banks suspended loan classification and payment of instalments from 1 January to 31 December 2020 on the instructions of the central bank in the wake of the Covid-19 pandemic that hit the economy very hard.
Farah Nasser said, "The deadline expired on 31 December 2020. This does not mean that loan classification will start from 1 January 2021. Usually, loan classification begins three months after the deadline."
A circular was issued on 28 September 2020 regarding the central bank's decision to suspend loan classification throughout the year 2020, considering the pandemic's negative impact on the economy. Earlier, the timeframe was from 1 January to 30 September.
During the suspension period, there was no compulsion to pay instalments. If a customer did not pay the instalment, he would not be considered a defaulter. However, if someone wanted to pay instalments, they could pay.
In addition to regular customers, those who took the opportunity to reschedule their loans with 2% down payment also enjoyed the same facility.
In the third quarter of this year, the amount of non-performing loans decreased slightly compared to the previous quarter as a result of the suspension of loan classification amid Covid-19, lowering the lending rate to single digit, changing the definition of defaulter, and the 2% down payment facility.
At the end of September 2020, the amount of defaulted loans stood at Tk94,400 crore, slightly lower than that of the previous quarter. The amount of defaulted loans reached a record high of Tk1,16,288 crore in September 2019.
