BB eases loan repayment rules for NBFI clients


| Updated:
06 September 2022 17:47:34

Bangladesh Bank (BB) on Sunday issued a circular for Non-Banking Financial Institutions (NBFIs), easing loan repayment facilities for their borrowers, especially businesses affected by Covid.

The new loan rescheduling policy will allow defaulters to repay their term loans over a period of six years for the first time, five years for the second time and an additional five years for the third time.

Even defaulters could get the rescheduling facility for the fourth time after special consideration.

For the first rescheduling, the minimum down payment will be 4.0% of total arrears or 7.0% of default payments, whichever is lower.

For the second time, the minimum down payment will be 5.0% of total arrears or 8.0% of overdue installments.

For the third time, the down payment will be 6.0% of total arrears or 9.0% of overdue installments.

Previously, defaulters could regularize their loans by paying 10-30% of the outstanding amount as a down payment.

The BB, in its latest circular, also included certain conditions for benefiting from the facility, which stipulated that the rescheduling or restructuring of the loan would benefit from a grace period of six months.

Borrowers, who rescheduled Non-Performing Loans (NPLs), would default on default after using the rescheduling facility for the fourth time.

In an advisory, the BB said the cash flows of small, medium and large borrowers and businesses have been affected due to the impact of the coronavirus pandemic and the Russian-Ukrainian war.

In some cases, loans cannot be rescheduled or restructured under the existing guideline. The new guidance was issued to help NBFIs properly manage their graded loans and make loan repayments easier for affected borrowers, he added.

The new rescheduling or restructuring directive for NBFIs came nearly two months after the BB offered a nearly similar facility to banks.

Previously, the repayment term of rescheduled loans could be set at a period ranging from 24 months to 48 months. Now, the scope could be extended from a minimum of 60 months to a maximum of 72 months.

NBFIs would also have three months to decide whether to approve a loan rescheduling or restructuring, up from one month previously.

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