Bangladesh Bank has extended its scheme for loan defaulters for another three weeks to pay off their debts.
In a circular issued on Thursday (Aug 8), the central bank has said loan defaulters now can apply for rescheduling and "One Time Exist" from their classified loans up to Sept 7.
Earlier on May 16, the central issued a circular to allow defaulters to regularize bad loans by paying a 2 percent down payment only, instead of 10 percent to 50 percent within 10 years, effective till Aug 16.
Although almost all sectors have been included for the latest loan rescheduling policy, the May 16 circular specifically mentioned a number of privileged priority sectors.
Trading sectors like wheat, food items, edible oil and refinery, and shipbreaking, and other sectors where a huge number of bank loans have remained unpaid for long, would 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.
However, five days after BB's circular, the High Court, on May 21, issued a status quo till Jun 24 on it following a writ petition.
On Jun 24, the High Court extended the freeze order by two months, till Aug 24.
Later on Jul 8, the Appellate Division stayed the HC freeze order for two months offering lenient terms to loan defaulters meaning that the BB scheme would remain active for the time being.