Bangladesh Bank rejects plea for special rescheduling facility for written-off loans

HM Murtuza | Published: 00:00, Oct 15,2019


The Bangladesh Bank has turned down the banks’ proposal for providing special rescheduling facility against written-off loans.

The central bank last week issued letters to the banks, informing them that there was no scope for giving such facility introduced for defaulted loans against written-off loans, BB officials said.

The written-off loans are the defaulted loans that banks erase from their balance sheets after a certain period of time subject to 100 per cent provision against such loans.

The banks had raised the issue of giving special rescheduling facility for written-off loans at several meetings with the central bank, prompting the BB to issue the letters, BB officials said.

Senior bank officials said that the proposal was placed before the BB as the facility would help them recover written-off loans.

They said if the written-off loans were allowed to be rescheduled by paying 2 per cent down payment, there would be no risk.

Although the rescheduling facility given by the central bank under political consideration in May this year was meant for only the defaulted loans, state owned banks have received a significant number of applications from the defaulters after their loans were written off by the banks.

For instance, Sonali Bank, which has been suffering from Tk 12,188.34 crore in defaulted loans and another Tk 7,094 crore in written-off loans, has received around 60 applications from such loan defaulters.

Legal complexities after the loan write-off by the banks and subsequent defaulted status in Credit Information Bureau (CIB) report might have prompted the defaulters to seek the special loan rescheduling facility, bank officials said.

On the other hand, the defaulted status in the CIB report is also working as a barrier to securing fresh loans by them from any other banks, they said.

They said if their written-off loans were rescheduled, the loan defaulters would get scope for getting fresh loans from the banks along with getting respite from facing legal complexities.

The amount of total written-off loans in the country’s banking sector stood at Tk 54,463 crore at the end of June this year.

Of the amount, banks managed to recover Tk 13,286 crore.

Under the BB’s rescheduling policy introduced on May 16 this year, the defaulters are given a 10-year loan repayment tenure including a one-year grace period by paying meagre 2 per cent down payment.

Initially, the defaulters were asked to submit applications within 90 days, but the deadline was extended several times to October 20.

Although the private commercial banks are comparatively reluctant to allow such facility to the defaulters, the state-owned banks have received huge number of applications from defaulters.

Sonali Bank alone has received around 1,000 applications by September this year for rescheduling of Tk 3,317.17 crore in defaulted loans.

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