DHAKA, May 17, 2019 (BSS) – Economists, bankers and businesspeople have expressed mixed reactions over Bangladesh Bank (BB) initiatives for providing facilities to the loan defaulters and good borrowers for reducing the huge amount of Non-Performing Loan (NPL).
The central bank on Thursday issued a circular asking the banks to provide minimum 10 per cent rebate on the total amount of interest or profit of the good borrowers for the last 12 months in every September.
In another circular, BB offered a special facility to loan defaulters allowing them to reschedule loans by paying 2.0 per cent down payment for a maximum period of 10 years.
Talking to BSS today, World Bank Lead Economist for Dhaka office Dr Zahid Hossain welcomed the BB decision for giving incentives to good borrowers, saying that the initiatives will help reduce new loan default.
“Undertaking initiatives for providing rebate to the good borrowers is a positive step. But its positive result will depend on its proper implementation,” he added.
Zahid urged the authorities concerned to step up monitoring activities for ensuring proper execution of the move.
Referring to the special facilities for loan defaulters, the World Bank lead economist said the initiative is also good for reducing the existing huge amount of NPL, but the government will have to clear many issues to take positive result from it.
“The authorities concerned will have to reform the existing legal framework for the loan defaulters,” he added.
In his reaction, Distinguished Fellow of the Centre for Policy Dialogue (CPD) Professor Mustafizur Rahman underscored the need for reforming the existing laws to take medium and long-term result from the initiatives.
“The initiatives are expected to remove short term liquidity crisis of the banks. But there will be no long term effects, if we can’t reform the existing laws,” he added.
Welcoming the central bank move, President of the International Business Forum of Bangladesh (IBFB) Humayun Rashid said the initiatives will help the good borrowers to run their business smoothly.
“It’s a good decision. But, the authorities concerned will have to increase their monitoring activities for its proper implementation,” he said.
“Simultaneously, the authorities concerned will have to be more careful about the intentional loan defaulters,” he added.
Talking about the issue, Association of Bankers, Bangladesh (ABB) President and Dhaka Bank Managing Director Syed Mahbubur Rahman said banks can provide more facilities to the unintentional loan defaulters.
“But, we will be more careful about the intentional loan defaulters,” he added.