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Bangladesh Bank adopts new policy with 'exit facility' for borrowers

Bangladesh Bank adopts new policy with 'exit facility' for borrowers

Special Correspondent

This time, Bangladesh Bank has issued a new policy with 'exit facility' for defaulters. As a result, defaulters will get special benefits with only 10 percent down payment from now. Yesterday Monday, the Banking Regulations and Policy Department of Bangladesh Bank has issued a policy with this facility.

In the guidelines, the central bank said, the borrower's business, industry or project sometimes ceases or runs at a loss due to various reasons beyond its control. In such a situation, collection of loan installments from the customer from the concerned business is hindered. As a result, defaulters or defaulters are classified, which do not fall under the category of willful defaulters. Due to the financial condition of the customer, there is a need for collection or adjustment under debt exit where the debt is not likely to be recovered.

According to the policy, minimum criteria will be considered for granting exit. In accordance with this policy, banks will formulate their own exit policy, which will be approved by the bank's board of directors.

However, banks cannot add any flexible terms to their policies. A regular loan exit facility can be provided for the purpose of recovery of defaulted loans that are unlikely to be recovered in the future or in case of closure of the project or business due to uncontrollable reasons or in case of closure of the project or business by the borrower.

A minimum 10% down payment of the loan balance should be paid in cash to apply for exit facility. The bank will settle the same within 60 days of receiving the borrower's application. However, the exit facility must be approved by the bank's board of directors.

However, the management authority of the bank will have the power to grant exit facility for loans up to Tk 10 lakh. The forgivable interest under this facility is to be transferred as separate blocked and the interest kept as blocked after full repayment or adjustment will be treated as final waived. The loan can be repaid in one or more installments under the exit facility.

In case of repayment of loan in multiple installments, repayment schedule should be formulated based on banker-customer relationship. The repayment period will not normally exceed two years. However, the Board of Directors may extend the period by a maximum of one more year on consideration of reasonable cause.

According to the special instructions, the pre-exit debt status will remain in place until the debt obligations of individuals, institutions or companies receiving exit benefits are fully paid. A defaulting borrower will be identified as a defaulter as per rules.

According to the data of Bangladesh Bank, at the end of March 2024, the total amount of disbursed loans of the banking sector stood at Tk 16 lakh 40 thousand 855 crores.

Of these , Tk 1 lakh 82 thousand 295 crore has become defaulted, which is 11.11 percent of the total disbursed loans. In one year defaulted loans increased by Tk 50 thousand 675 crore and in three months it increased by Tk 36 thousand 367 crore. A year ago in March 2023 it was Tk 1 lakh 31 thousand 620 thousand crore and last December it was Tk 1 lakh 45 thousand 633 crore.

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