Political turmoil still blamed for rescheduling of bank loans

Many business organisations have been pressing the central bank for rescheduling their default loans saying that their business still suffers 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 in allowing such rescheduling cases. The borrowers were allowed to continue their loan rescheduling with fewer down payments than the required amount even after the expiry of the relaxed policy deadline. But the new BB Governor, Fazle Kabir, has stopped this practice soon after he took over the charge of the central bank in March this year. Many clients, who had earlier rescheduled their loans, taking the advantage of the relaxed policy, has 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 seeking for loan rescheduling. Global price fall and spillover effect of political turmoil are mainly attributed to business loss. Nafi International involved with importing food grains has become defaulter with 46 LTR loan accounts worth around Tk46 crore. The Southeast Bank client has sought for rescheduling in July this year to Bangladesh Bank, citing the ground that its business has long been suffering from the year 2013 due to the political turmoil. The client claimed that his business transaction fell down at the end of the year 2014. Moreover, price fall of food grains in the local markets has further contributed to its financial lose. Earlier in December 2014, Bangladesh Bank had allowed Nafi International to reschedule its loan under the special facility in the wake of political unrest. The proposal of for loan rescheduling was approved subject to 5% down payment with a 6-month grace period. But, the client eventually turned into a defaulter as he failed to pay the required down payment accordingly. Motiur Rahman, Bank Asia’s client also engaged in the import of food grain, has also sought for loan rescheduling this month. He also incurred a loss in business due to political turmoil during the year 2013 and 2014 and still suffering from the spillover effects. He sought for rescheduling 40 LTR loans by converting in term loan worth Tk16 crore. New BB Governor Fazle Kabir has been allowing loan rescheduling proposals subject to full payment of the required down payment as per the rule, said a senior executive of Bangladesh Bank. Bangladesh Bank relaxed its reschedule policy in December 2013 to facilitate the business groups affected by political unrest. Businessmen took the advantage of relaxed policy till June 2014.