ISLAM SIDDIQUE |
Sept. 16, 2021, 8:27 a.m.
The central bank is now tightening the noose around short-term lending operations by non-bank financial institutions (NBFIs) limiting the rescheduling of their loans or leases to only three times.
Bangladesh Bank officials say the brake is on to ensure “credit discipline” in the sector – where a host of fiascos are exposed in some cases.
NBFIs have been tasked with making decisions on rescheduling loans or leases within a month of receiving the required down payments, according to a notice released by the BB on Tuesday.
The first rescheduling request will be considered upon receipt of cash payments of at least 15 percent of overdue payments or 10 percent of the total outstanding amount of a loan or lease, whichever is less. .
The rescheduling request for a second time will be considered after receipt of cash payments of at least 30 percent of overdue payments or 20 percent of the total outstanding amount of a loan or lease, whichever is less. of them.
For the third time, the rescheduling request will be considered after receipt of cash payments of at least 50% of overdue payments or 30% of the total outstanding amount of a loan or lease, whichever is less. of them.
“We issued the notification to protect the interests of depositors by ensuring credit discipline in the industry,” a senior BB official told FE on Wednesday while explaining the virtues of the instructions.
Citing the notification, the central banker said a borrower would be treated as a willful defaulter if he failed to repay loans or leases after receiving three rescheduling facilities.
Borrowers will get a maximum of nine years to settle their term loans or leases by taking advantage of rescheduling facilities, he explained.
In the case of short-term loans or leases, borrowers will be eligible for up to two years to make their payments using this rescheduling facility, according to the notification.
It also states that the accumulated amount of interest on rescheduled loans or leases will be counted with interest suspension and will not count towards income unless it is actually realized.
The regulator’s latest decision came in the context of the resetting of the timing and amount of loan and lease payments in different ways by some NBFIs.
The real picture of loan recovery in the NBFI sector is not reflected due to the resetting of scheduled payments and not following the rescheduling policy properly, according to the notification.
Md Nurul Amin, Chairman of FAS Finance and Investment Limited, welcomed BB’s latest measures, saying they would help ensure good governance in the NBFI sector.
Mr Amin, also a former president of the Bangladesh Bankers Association (ABB), said borrowers would be vigilant before falling into the trap of being dubbed “willful defaulters” for failing to comply with bank rules and regulations. rescheduling policy.
“This will help ensure credit discipline in NBFIs,” Golam Sarwar Bhuiyan, vice president of the Bangladesh Leasing and Finance Companies Association (BLFCA), told FE in his initial reaction.
Mr Bhuiyan, also managing director of Industrial and Infrastructure Development Finance Company (IIDFC) Limited, said the loan rescheduling or leasing policy for NBFIs is almost similar to that of banks.