Banks seek special bad loan rescheduling facility

Banks in Bangladesh have asked for 'special default loan rescheduling facility' as the amount has kept soaring in recent times.

Ali Reza Iftekhar, chairman of the Association of Bankers, Bangladesh (ABBD), on Monday told reporters that central bank had relaxed its policies for default loan rescheduling for banks that suffered due to last year's political instability.

The facility ended in June this year.

"We've sought a special facility for this year as the default loan amount had been surging recently," he said.

At Monday's meeting, Bangladesh Bank Governor Atiur Rahman asked the banks to cut the amount of default loans.

ABBD chief Iftekhar said they had also sought that the time for keeping provisions against the banks' losses in the capital market be increased by one year.

The central bank governor said he would consider the requests.

Bangladesh Bank on Dec 23 last year relaxed loan rescheduling terms for agricultural and industrial sectors considering the damages inflicted by the unrest.

Conditions for rescheduling loans in SME sector were eased before that.

It facilitated credit rescheduling by paying only 5 percent of the total loan figure. Earlier it was 15 percent.

The facility led to a fall of default loan by Tk 180 billion in the banking sector until June this year.

Since then, bad loan has rocketed to a whooping Tk 572.9 billion or 11.6 percent of the disbursed loan by the end of September.

Governor Rahman said the amount was "worrying".

Deputy Governor SK Sur Chowdhury told reporters after the meeting that they had suggested bringing down the default loan amount.

"We hope the default loan amount will come down to single digit by the end of December," he said.