The government has finalised the default loans restructuring policy increasing interest to 9 per cent from proposed 7 per cent, said finance minister AHM Mustafa Kamal on Tuesday.
The provision of down payment of 2 per cent of the outstanding loan and 12 years for clearing the loan were kept unchanged in the scheme that will come to effect in May, he said at a briefing at the planning commission.
The decisions were taken at a meeting with the financial institutions division officials earlier in the afternoon at the minister’s office at the Economic Relations Division.
Mustafa did not mention about the moratorium period.
Financial institutions division officials who attended the meeting said defaulters would get two years grace period once Bangladesh Banks approves their appeal for restructuring bad loans.
Mustafa said the financial institutions division would issue the new guidelines on restructuring bad loan soon.
The bad loans in the country’s banking sector almost doubled to Tk 93,911.4 crore in 2018 from Tk 43,485.71 crore of 2015.
State-owned commercial banks — Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Development Bank and BASIC Bank — had bad loans of Tk 48,695.87 crore in 2018, 51.85 per cent of total amount of such loans in Bangladesh.
According to the existing bad loan rescheduling policy framed in 2015, loan defaulters have to repay long-term loans in 12 years and short-term loans in six years with a 12-month moratorium.
The loan defaulters now have to make 2 per cent down payment on outstanding loan amounting less than Tk 1,000 crore and 1 per cent down payment for outstanding loans of Tk 1,000 crore or above.
Between 2003 and 2015, the Bangladesh Bank allowed applicants to make cash payment of at least 15 per cent of the overdue installments or 10 per cent of the outstanding loan, whichever was less.
Economists and banking experts have already opposed the government’s new policy for restructuring bad loans saying that it would create scopes of misusing the facility by the large and willful defaulters with political influence.
Mustafa said the government would give incentive to honest businessmen and keep the dishonests on the run.
Focusing on issues in cluding upcoming budgetary measures, capital market and insurance sector, the minister said paid up capital of the banks should be increased to Tk 1,000 crore while that of insurance company to Tk 500 crore.
He also said the country’s insurance regulator should examine whether the large projects like the Padma Bridge, the Rooppur Nuclear Power Plant and the Padma Bridge Rail Link needed reinsurance for covering risk factor.
He iterated that crop insurance would be introduced in haor areas on experimental basis and measures would be taken to bring all under insurance coverage.
He also iterated that the insolvency act, the bankruptcy act and assets management companies should be there to help the businessmen overcoming difficulties.
He said as a businessman he suffered during two-year of stay in jail during the military-backed caretaker administration.
Mustafa, however, said he was no more a businessman.
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