Economic Reporter :
The country’s banking sector has regularised a total of Tk1,137 billion from July 2013 to December 2015 during political turmoil following the national poll held on January 5, 2013, central bank data showed.
Of the total amount, banks have rescheduled Tk823.92 billion and restructured Tk313.83 billion.
Of the rescheduled amount, a loan of Tk300 billion were regularised taking the advantage of relaxed policy while Tk522.44 billion in compliance with the rescheduling policy.
Bangladesh Bank observed that the recovery of rescheduled loans under the relaxed policy was unsatisfactory.
In this perspective, banks have been asked to take necessary measures to strengthen recovery process. At the same time the central bank forwarded the observation report to its inspection department to investigate into the loans that were rescheduled taking the policy advantage.
Earlier, BB relaxed its loan rescheduling policy in December 2013 to support businesses to overcome shock caused by political turmoil. Though the policy advantage expired on June 2014, the central bank continued to allow rescheduling under its relaxed policy till December that year in the face of pressure from business people.
Moreover in January 2015, it introduced another formula for large loan restructuring which expired in June that year. Only default loans worth over Tk5 billion were enrolled with the special package.
Under the special package a total of Tk187.66 billion were restructured during the turmoil period of 29 months against which recovery was only Tk11.84 billion. On the other hand, loans of Tk126.17 billion were restructured under the existing policy against which recovery was around Tk20 billion.
Among the banks, Janata Bank restructured the highest amount of large loans. The bank restructured Tk50.70 billion taking the relaxed policy advantage. On the other hand, the scam-hit BASIC Bank restructured loans of Tk21.25 billion complying with the regular policy.
Bangladesh Bank found that the recovery rate of the loans regulairsed, taking no objection from the central bank, was only 11.48 percent while it was 31.50 percent for the loans rescheduled under the existing policy.
The rate of recovery from the total rescheduled loans was 24.17 percent according to the central bank data. Of the total rescheduled amount, 17.33 percent or Tk51.16 billion were default loans.
Many business organisations have been pressing the central bank for rescheduling their default loans, saying that their business still suffer from the spillover effects of political unrest in 2013 and 2014.
Though the loan defaulters had earlier enjoyed a relaxed loan rescheduling facilities till June 30 last year, Bangladesh Bank (BB) has now become very rigid with allowing such rescheduling cases.
The borrowers were allowed to continue their loan rescheduling with a fewer down payments than required even after the expiry of relaxed policy deadline.
But the new BB Governor, Fazle Kabir, stopped this practice soon after taking over the charge of central bank in March this year.
Many clients, who had earlier rescheduled their loans, taking the advantage of relaxed policy, failed to continue their installment payments as their businesses are yet to overcome the losses incurred during the political turmoil.
As a result, they again sought for loan rescheduling from the central bank as they turned defaulters.
According to the Bangladesh Bank data, LTR (Loan Against Trust Receipt) loans are mostly getting default and rescheduling is sought for that.
Global price fall and spillover effect of political turmoil are mainly attributed to business loss.
The country’s banking sector has regularised a total of Tk1,137 billion from July 2013 to December 2015 during political turmoil following the national poll held on January 5, 2013, central bank data showed.
Of the total amount, banks have rescheduled Tk823.92 billion and restructured Tk313.83 billion.
Of the rescheduled amount, a loan of Tk300 billion were regularised taking the advantage of relaxed policy while Tk522.44 billion in compliance with the rescheduling policy.
Bangladesh Bank observed that the recovery of rescheduled loans under the relaxed policy was unsatisfactory.
In this perspective, banks have been asked to take necessary measures to strengthen recovery process. At the same time the central bank forwarded the observation report to its inspection department to investigate into the loans that were rescheduled taking the policy advantage.
Earlier, BB relaxed its loan rescheduling policy in December 2013 to support businesses to overcome shock caused by political turmoil. Though the policy advantage expired on June 2014, the central bank continued to allow rescheduling under its relaxed policy till December that year in the face of pressure from business people.
Moreover in January 2015, it introduced another formula for large loan restructuring which expired in June that year. Only default loans worth over Tk5 billion were enrolled with the special package.
Under the special package a total of Tk187.66 billion were restructured during the turmoil period of 29 months against which recovery was only Tk11.84 billion. On the other hand, loans of Tk126.17 billion were restructured under the existing policy against which recovery was around Tk20 billion.
Among the banks, Janata Bank restructured the highest amount of large loans. The bank restructured Tk50.70 billion taking the relaxed policy advantage. On the other hand, the scam-hit BASIC Bank restructured loans of Tk21.25 billion complying with the regular policy.
Bangladesh Bank found that the recovery rate of the loans regulairsed, taking no objection from the central bank, was only 11.48 percent while it was 31.50 percent for the loans rescheduled under the existing policy.
The rate of recovery from the total rescheduled loans was 24.17 percent according to the central bank data. Of the total rescheduled amount, 17.33 percent or Tk51.16 billion were default loans.
Many business organisations have been pressing the central bank for rescheduling their default loans, saying that their business still suffer from the spillover effects of political unrest in 2013 and 2014.
Though the loan defaulters had earlier enjoyed a relaxed loan rescheduling facilities till June 30 last year, Bangladesh Bank (BB) has now become very rigid with allowing such rescheduling cases.
The borrowers were allowed to continue their loan rescheduling with a fewer down payments than required even after the expiry of relaxed policy deadline.
But the new BB Governor, Fazle Kabir, stopped this practice soon after taking over the charge of central bank in March this year.
Many clients, who had earlier rescheduled their loans, taking the advantage of relaxed policy, failed to continue their installment payments as their businesses are yet to overcome the losses incurred during the political turmoil.
As a result, they again sought for loan rescheduling from the central bank as they turned defaulters.
According to the Bangladesh Bank data, LTR (Loan Against Trust Receipt) loans are mostly getting default and rescheduling is sought for that.
Global price fall and spillover effect of political turmoil are mainly attributed to business loss.
