Bangladesh Bank has issued the official circular on the government’s new scheme for loan defaulters to pay off their debts.
The notification, in line with the proposition rolled out by Finance Minister AHM Mustafa Kamal in April, was sent to top officials of commercial banks on Thursday (May 16).
Those who are 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 9 percent interest over 10 years with a one-year grace period..

Although almost all sectors have been included for the latest loan rescheduling policy, the circular specifically mentioned a number of privileged priority sectors.

Trading sectors like wheat, food items, edible oil and refinery, and ship breaking, and other sectors where a huge number of bank loans have remained unpaid for long, will be considered for the latest loan rescheduling policy, the circular said.
Defaulted loans at specialised banks sanctioned for purposes other than agriculture will also be entitled to the facility, it added.
Other defaulted loans caused by factors beyond the control of otherwise 'good' borrowers will also be eligible for the rescheduling policy, the Bangladesh Bank circular elaborated.
In all cases, defaulters have to apply for the facility within 90 days of the circular. 


Besides the facility of loan rescheduling, the central bank in the circular said banks could waive all interest for defaulters, depending on the bank-client relationship.
Giving another facility to defaulters, the circular said loan defaulters could enjoy a ‘One Time Exit’ facility by paying only the bank's cost of funds and the principal loan amount. To avail the facility, defaulters have to pay the outstanding amount within a year.

Currently, a bank's cost of funds is typically between 3 and percent.