No going beyond rules: BB

Bangladesh Bank yesterday said it would not entertain any request beyond the rules stipulated in the latest rescheduling process it announced for defaulted loans. 

The central bank stated this at a meeting with managing directors of commercial banks at the BB headquarters in the capital.

BB Governor Abdur Rouf Talukder presided over the meeting.

Selim RF Hussain, chairman of the Association of Bankers Bangladesh, a platform of managing directors of banks, told journalists after the meeting that the BB had given all responsibilities of rescheduling to banks.

Lenders had earlier submitted a rescheduling proposal for defaulted loans to the central bank for cases involving borrowers applying to banks for reducing down payments from what was set by the BB.

"The BB said in the meeting that it will not do any operational work related to the loan rescheduling," he said.

The central bank has recently faced criticism from different corners after issuing a circular on July 18 where it substantially relaxed policies for loan rescheduling.

As per the new rules, defaulters who took term loans would be allowed to repay funds over a period of six years to eight years each time they reschedule their defaulted loans. In contrast, it was previously nine months to two years.

The new rules also mentioned that defaulters who took term loans would have to make a down payment of only 2.5 per cent to 6.5 per cent of their total NPLs instead of the previous 10 per cent to 30 per cent.

Hussain claimed that the new rules would help banks with good corporate governance strengthen their financial health.

The BB governor warned in the meeting that the central bank would show zero tolerance to any breach of the new rescheduling policy.

Md Serajul Islam, spokesperson of the central bank, said the central bank would only carry out inspections on banks to check whether banks were being duly diligent while rescheduling defaulted loans.

"The BB will not take punitive measures against the non-complaint banks. Rather, it will take action against all officials engaged with the violation of the rescheduling policy," he said.

Responding to journalists' queries on the ongoing volatility in the foreign exchange market, he said the central bank had already injected more than $7 billion into the market to keep the financial sector stable.

The BB has asked banks to undertake initiatives to realise due payments against around $1.5 billion-worth exports, he said.

ABB Chairman Hussain said the global commodity market had stabilised to some extent in the last couple of days.

He went on to hope that stability might return to the foreign exchange market in the next two to three months.