THE Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has urged Bangladesh Bank to extend the moratorium on loan classification until June next year in consideration of the pandemic-induced impacts on trade and commerce. Businesses are still passing through dreadful times due to the slowdown stemming from the pandemic, as economic activities are yet to become stable, said the country’s apex trade body on Sunday. Sources said the federation has already sent a letter to the central bank, requesting it to consider the issue positively. Earlier this year, the Bangladesh Bank extended the loan repayment facility under relaxed conditions until 31 December, and borrowers can avail the opportunity by paying 25 per cent of their loan within the deadline. As per the rule, by repaying the instalments they will be allowed to avoid the default zone. The BB brought the loan moratorium policy into effect last year, enabling all borrowers to avoid having their loans classified.
Economists and bankers however strongly opposed FBCCI’s demand, pointing out that facilitating another round of the relaxed policy would have a severe impact on the economy. The central bank should not entertain the demand as the economy has been strongly bouncing back. Entrepreneurs of the small and medium enterprises are now repaying their loans efficiently, so extending the facility, especially for the big borrowers, is not a logical demand. The trade bodies they mentioned usually express such types of expectations continuously, but the central bank should consider the issues in the interest of the economy. They, however, suggested that the central bank should allow banks to extend this facility of their own after studying on a case-by-case basis, which company is really struggling with. Moreover, banker-customer relationships are now good enough to handle the issue.
Meanwhile, chiefs of the two banks, on condition of anonymity given the sensitivity of the matter, said the lenders would not be able to repay depositors if the relaxed policy was extended further. The private sector itself will face difficulties, as banks will be unable to give out loans fulfilling requirements of businesses. Moreover, the private sector credit growth, which is now in the course of gaining tempo, will face another setback. We believe that extending the relaxed loan classification policy will not bring any good for banks as well as businesses. Last week, the International Monetary Fund also advised the central bank to follow an orderly exit from all these general forbearance that were given to the banks, corporations and big business houses.
