Finance Minister Kamal raises loan defaulter scheme interest rate from 7% to 9%

The government has brought slight changes to a scheme announced earlier to allow loan defaulters to repay their debts at simple interests.

From now on, a defaulter will have to pay off the loan with 9 percent interest instead of 7 percent, according to the finance minister.

“Nine is the benchmark. Now no-one will object to it. I’ve made it nine because seven was too low," AHM Mustafa Kamal told an urgent news briefing at the NEC Conference Room on Tuesday.

A few days ago, the minister rolled out the facility for the bank loan defaulters so that they can clear debts.

Those who were unable to pay, but can give ‘adequate justification’ for their situation, will be allowed to pay off the loans with a 2 percent down payment on the loan amount and 7 percent interest over 12 years. Now the interest rate has been revised to 9 percent.

“We are giving relief to those who are trying to be good loan takers,” said the finance minister.

He believed that both the lenders and takers will benefit if interest rate was set at 9 percent on the debt repayment.

“I believe everyone will benefit. Banks will also be able to recover the cost of funds. And those who are taking money will be able to repay the loan smoothly. "