Business people are likely to have a moratorium on payment of loan installments extended as Bangladesh Bank (BB) is actively thinking of doing so amid a slowdown in economic activities, for another wave of the Covid-19 pandemic.
Business people are pursuing the central bank to extend the payment pause till June this year.
"We're aware of the overall situation . . . the central bank will reconsider extending the moratorium after analysing the payment situation of banks," said a senior BB official.
According to the central bank, quarterly installment payment against term loans is supposed to start from March after the payment deferral facility was lifted in January this year.
Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman told Bangladesh Post, “Moratorium on the payment of loan installments would certainly help the business community continue their business smoothly amid the Covid-19.”
"We expect that the central bank will consider the issue positively and take steps to extend the moratorium further for the sake of the economy," he added.
Echoing the same views, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Dr Rubana Huq said the clothing industry is facing a hard time amid the pandemic, and if the central bank extended the moratorium it would be very much helpful for the RMG sector.
When contacted, a senior executive of BB said that not all borrowers will be given the payment deferral facility, the central bank is working on how to provide the facility to the business people genuinely hit hard by the infection.
He further said banks and other financial institutions are against extension of such a facility, while the business community wants it. So, the central bank will find a way to balance the two scenarios, he added.
In March, 2020, BB suspended loan classification at the instruction of the government aiming to support businesses affected by Covid-19. Term loan borrowers enjoyed the payment pause facility throughout 2020.
The moratorium expired on January 1 this year and the central bank lifted the facility, reviewing the loan payment situation, loan recovery and profitability of banks.
After analysing the payment situation, BB decided that although the installment deferral facility was effective for a total loan of Tk 10,95,000 crore, the policy relaxation facility was given by 49 banks for only Tk 2,55,386 crore.
The loan recovery situation also seemed impressive as only 23 percent of borrowers availed the installment deferral facility against which the loan recovery rate was 14.37 percent.
The recovery rate shows that borrowers who did not take the payment deferral facility could continue interest payments.
The payment deferral helped reduce default loan to 7.66 percent in December, 2020, which was 9.32 percent in the same period of 2019.