Bad loans are the main wound of the banking sector. The regulatory body is not able to cure this wound even with various measures. In such a situation, the central bank has issued a new policy to give ‘exit facility’ to defaulters.
From now on only 10 percent down payment will get special benefits for defaulters.
(Monday 8th July) Banking Regulations and Policy Department of Bangladesh Bank has issued this policy with the relevant facilities. In the instructions, the central bank said that the borrower’s business, industry or project sometimes closes due to various uncontrollable reasons or runs at a loss.
In such a situation, collection of loan installments from the customer is hindered from the concerned business. Consequently, the loan is classified as default or adverse, which does not fall under the category of willful default. Due to the financial condition of the customer, there is a need to recover or adjust the debt under exit where the debt is not likely to be recovered.
Banks are following different procedures or criteria for exit as there is no specific policy regarding loan recovery or adjustment under exit. So a uniform policy is needed to provide these benefits. Considering this situation, the central bank has issued a policy to continue the liquidity flow of the bank through debt recovery and to reduce classified loans in the banking sector.
According to the policy, minimum criteria will be considered for granting exit. In accordance with this policy, banks will formulate their own exit policy, which will be approved by the bank’s board of directors. However, banks cannot add any flexible terms to their policies.
