The disruption in instalment payments has, in turn, hampered the usual credit flow to the sector, which has compelled the central bank to take the initiative
The Bangladesh Bank yesterday introduced a loan rescheduling and one-time exit policy with easy terms for tanneries that relocated to the leather industrial city at Savar to bring down the sector’s default loans.
Several loans granted to the tannery owners had turned sour for failure to repay instalments regularly on different grounds, as per the BB notice.
The disruption in instalment payments has, in turn, hampered the usual credit flow to the sector, which has compelled the central bank to take the initiative, said a high official of the central bank.
Banks can offer one-time exit policy with only 2 per cent down payment for the tannery owners, who are not able to continue their business, the notice said.
The tannery owners who have bank loans amounting to Tk 5 crore as of December 31 last year will get three years for the exit.
Those who have loans amounting to upwards of Tk 5 crore will get a maximum of five years for the exit.
The bank board of directors can decide for waiver of the interest based on bank-customer relationship but the original loans and investment cannot be waived in any circumstances.
The lenders will be able to sell the collateral assets through prior approval of borrowers.
Banks can offer special rescheduling facilities with only 2 per cent down payment on cash for the tannery owners able to continue their business.
The lenders can reschedule their loans for ten years including a year’s grace period.
Banks should have to impose 9 per cent interest on the rescheduled or restructured loans.
The borrowers who have already enjoyed the special rescheduling facility will be eligible for the new scheme.
Loans approved by violating banking rules and regulations would be barred from the facility, the BB said.
The waived interest has to be transferred to a separate interest-free account. The interest income of the rescheduled loans cannot be transferred to income without actual collection.
If a client fails to pay the six-monthly instalments after availing the benefits, he/she will see their facilities revoked.
The loans classification and provisioning will be applicable if the loans are not repaid within the period.
The borrowers will have to apply to the respective banks within March 31 this year to get the loan rescheduling and one-time exit facility.
The notice, which was issued under the Bank Company Act, 1991, would come into effect immediately.
The tannery owners though are not content yet.
“We are facing various problems and our business has been hampered owing to various reasons including tannery relocation,” said Md. Shakawat Ullah, general secretary of the Bangladesh Tanners Association.
So, only loan rescheduling facility is not enough.
“Banks should waive the interest on loans from 2017 to 2019 as well,” he added.