Businesses want more respite from loan repayment

Businessmen have sought an extension to the loan moratorium facility till 31 December as the second wave of Covid-19 has got in their way to recovery.

At the same time, they have demanded that the classification of loans be stopped, according to a letter sent by FBCCI President Md Jasim Uddin to the governor of the central bank on 16 June. 

He expressed gratitude for the various incentive packages provided by the government to revive the economy overcoming the pandemic-triggered losses, particularly for giving some concessions in repayment of loan installments this year. 

However, as the situation worsened again due to the second wave of Covid-19, he requested the central bank to provide the same payment deferral benefit as they enjoyed last year.

When asked about the letter, FBCCI senior Vice-President Mostafa Azad Chowdhury Babu told The Business Standard that the transport, tourism, hotel and restaurant sectors have been hit hard by Covid. Especially outside Dhaka, the transport sector has been severely affected.

Traders in these sectors cannot afford to pay installments. If the payment deferral time is not extended, the loans of traders in these sectors will become bad/loss loans. Banks are pressuring customers to repay their loans by 30 June, the business leader said.

He said there is a loan payment relaxation in effect till 30 June. It would be helpful for businessmen if the announcement to extend the loan payment pause comes in a day or two.

He said if the amount of bad loans increases, banks will also lose profits as a result of keeping additional provisions. A group of businessmen had recently made a request to the prime minister in this regard.

Meanwhile, the Chattogram Chamber of Commerce and Industry (CCCI) has also written a letter to the central bank governor on 19 June, requesting to extend the time to repay the loan installments till 31 December and to suspend the loan classification.

Like the FBCCI president, the CCCI president also highlighted the various steps taken by the government to revive the economy, and said the country was under unexpected economic pressure as the Indian variant of Covid has spread across the country.

In this situation, he demanded an extension to the repayment period of all types of loans till December this year. He said the country's economy and industry will be able to return to normalcy after overcoming the recession.

Although the facility of non-payment of loan installments was given to all types of loans throughout the last year, this year various benefits have been given depending on the type of loan. In the case of term loans, the repayment time has been extended by 50%.

The current loans were given the opportunity to repay the unpaid interest in six quarterly installments. The demand loans were given the opportunity to repay in eight equal quarterly installments, extending the repayment term from 31 March to 30 June 2021.

However, despite so many opportunities, the growth of default loans has not stopped. In the three months of this year (January-March), the amount of default loans stood at Tk94,265 crore, an increase of Tk6,000 crore over December last year, which is 8.48% of the total loans disbursed till March. Bad/loss loan is 88% of the default loans, or Tk83,116 crore.