The Bangladesh Bank on Sunday introduced a loan rescheduling policy with easy terms for tannery owners ahead of Eid-ul-Azha, the second largest religious festival of the Muslims.
A BB circular issued in this regard on the day said that several loans granted to the tannery owners had turned defaulted for failure to repay instalments regularly on different grounds.
The disruption in instalment payments has in turn hampered the usual credit flow to the sector, the BB circular said.
To resolve the problem, the central bank issued the easy loan rescheduling policy so that the actual tannery owners get the required money on the occasion of Eid-ul-Azha for rawhide purchase and preservation.
The circular said that the banks, based on their relationship with the customers, would be able to reschedule loans granted to the tannery owners, upon 2 per cent down payment on the outstanding amount as of June 30, 2020.
Any previous payment, however, cannot be considered as down payment, the circular said.
The central bank also set four other conditions for rescheduling loan s to the tannery owners.
It said that if any entity’s loans turned defaulted due to any unavoidable reason, it would get the rescheduling facility only if the entity’s business was in operation.
On a case-to-case basis, demand loans can be rescheduled for up to a six-year period, including a one-year grace period, while term loans can be rescheduled for up to eight-years, including a one-year grace period.
The circular also said that the banks would be able to relax the condition of taking the compromised amount from the borrowers if the borrowers applied for fresh loans.
The borrowers will have to apply to the respective banks within July 30 this year to get the loan rescheduling facility under the circular, it said.
The circular would come into effect immediately and was issued under the Bank Company Act, 1991.
The country’s export of leather and leather goods generates around $1 billion in earnings.
Leather businesses collect 50 per cent of their annual raw materials during Eid-ul-Azha.
In 2019, the four state-run banks disbursed around Tk 655 crore to 23 tannery owners besides providing tannery factories with the loan rescheduling facility.
Janata Bank, alongside issuing fresh credit worth around Tk 200 crore, would reschedule loans amounting to Tk 1,105 crore which were issued for purchasing rawhide in 2018.
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