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BB relaxes rescheduling policy for SME loan

Staff Correspondent

A photo shows workers busy making cane furniture at a factory in Sylhet. Bangladesh Bank on Wednesday relaxed SME loan classification and rescheduling policy as such loans disbursed by scheduled banks would be turned into defaulting condition due to the country’s existing political turmoil.— New Age photo A photo shows workers busy making cane furniture at a factory in Sylhet. Bangladesh Bank on Wednesday relaxed SME loan classification and rescheduling policy as such loans disbursed by scheduled banks would be turned into defaulting condition due to the country’s existing political turmoil.— New Age photo

Bangladesh Bank on Wednesday relaxed SME loan classification and rescheduling policy as such loans disbursed by scheduled banks would be turned into defaulting condition due to the country’s existing political turmoil.
To this end, the BB issued a circular to managing directors and chief executive officers of all banks saying that they (banks) should consider to receive down payment to reschedule the classified loans considering the ability of the SME entrepreneurs.
The latest relax in policy will be active till June 30, 2014, the circular said.
Besides, the banks will be able to make a block account from the existing loan accounts to waive the interest.    
The existing political unrest has put an adverse impact on the business and economic activities hampering normal businesses, the BB circular said.
Under the circumstances, the small and medium enterprises are facing loss and their ability fell into a declining trend, it said.
A BB official told New Age on Wednesday that a significant amount of SME loans would be defaulted in the next two or three months as they were now passing through a stagnant business situation due to the ongoing political unrest.
As per the existing rules, a client has to pay at least 10 per cent down payment of the total loans volume to reschedule it for the first time and the banks take 30 per cent down payment for the third time reschedule of any defaulted loan.
For the next six months and 12 days, the clients will be able to reschedule any SME defaulted loan without any down payment, if the banks agree, the BB circular said.
The SME clients will also get the block account facility for their existing loans on the bankers-customer relationship, it said.
Under the block account facility, the banks will be able to waive the interest for a certain period and they also would reset the rate of interest for the loans.
The BB circular said that the banks will be able to restructure the loans to bring standard position so that the loans would not fall in a defaulted condition.
Any loan will turn into SMA if the clients do not pay any installment or
interest of their loans for two months.
The SMA loans usually treat as a warning situation of defaulting zone as any loan will be treated classified or sub-standard category if the clients do not pay any installment or interest of the loans for three months.
The BB also advised the banks to ease the rate of interest on the SME loan.
Another BB official said that the new circular might create an indiscipline situation in the banking sector as the central bank had not mentioned any definite explanation to relax the SME loan policy.
‘The BB is yet to impose any SME loan ceiling for the banks. As a result, they are able to disburse big amount of loan in the sector,’ he said.
The banks may apparently show the common loan as SME credit in order to take the new facility, he said.
Besides, the influential clients may get the relax rescheduling and block account facility while the general clients will miss the scope, he said.




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