The Bangladesh Bank is preparing to offer loan rescheduling facilities to defaulters, despite Governor Ahsan H Mansur's previously stern stance against loan defaulters.
The initiative, driven by various business demands, includes easing down payment conditions, interest waivers, and extending loan terms, sources indicate.
However, deliberate and identified defaulters will not be eligible for these concessions.
A special committee, named the Selection Committee, has been established to oversee the process, comprising stakeholders from across the financial sector.
The committee is headed by Offsite Supervision Department Executive Director Mezbaul Haque, with Mohammad Shahriar Siddiqui from the Banking Regulation and Policy Department as the member secretary.
Other members include former banker Mamun Rashid, a joint secretary from the Ministry of Finance, and FBCCI Administrator Abdul Hai Sikdar.
The committee's main task is to review policies related to loan rescheduling and interest waivers, particularly for loans over Tk50 crore affected by recent socio-economic challenges like the COVID-19 pandemic, the Russia-Ukraine conflict, political instability, and natural disasters.
The recommendations will be scrutinised by the Bangladesh Bank before any decisions are made.
Only those genuinely affected by these crises will be considered, excluding identified defaulters.
This move comes in the wake of increased bad loans in the banking sector.
Following the government change on 5 August, many loans taken under unethical influence have turned non-performing, and earlier special facilities for such loans have ceased.
In the past year, bad loans have doubled, reaching Tk2.84 lakh crore by September, representing approximately 17% of total bank loans.
Experts have expressed concerns over the efficacy of these measures.
Dr Moinul Islam, a former professor of economics at the University of Chittagong, opined that the initiative might not significantly recover funds, as a substantial portion has already left the country.
He suggested seizing the domestic assets of defaulters as a more viable solution.
Bangladesh Bank Executive Director and Spokesperson Hosne Ara Shikha clarified that the committee aims to assess the need for special concessions in light of uncontrollable circumstances impacting genuine defaulters.
However, deliberate defaulters are barred from applying.
Similarly, Syed Mahbubur Rahman, managing director of Mutual Trust Bank, advocated for targeted support to genuinely affected businesses, cautioning against blanket concessions that could exacerbate bad loans.
He highlighted the inefficacy of previous leniencies, which saw bad loans escalate from Tk22,000 crore in 2009 to nearly Tk3 lakh crore presently.
Historically, the central bank has relaxed policies around election periods and during the pandemic, allowing minimal down payments for loan regularisation.
The current initiative appears to follow this trend, aiming to mitigate the rising tide of non-performing loans under the revised policies of 2022.
