Wednesday, 23 October, 2024
Bangladesh Bank (BB) has directed borrowers affected by recent floods to repay their loan instalments within three months after the normal repayment period to facilitate repayment adjustments.
This means that if entrepreneurs make their payments within 90 days following the last day of the loan instalment, they will not be considered defaulters.
The central bank issued a notification on Sunday, which was sent to the managing and executive directors of all commercial banks.
According to the notice, extensive flooding has recently inundated several districts across the country. As a result, affected borrowers—particularly those in the agriculture and cottage, micro, small, and medium enterprises (CMSMEs) sectors—may struggle to repay their loan instalments on time.
To alleviate the repayment burden on flood-affected borrowers, the BB has stated that installments due between August 2024 and October 2024 for existing agricultural and CMSME sector loans issued to designated flood-affected areas (as identified by the Ministry of Disaster Management and Relief on August 1, 2024) must be repaid within three months after the end of the respective loan period.
The central bank also extended the adjustment period for loans due from August to October 2024 by an additional three months. However, finance companies must independently verify that customers are genuinely affected by the floods.
The BB circular further clarifies that if a customer declines to accept these benefits, the loan instalments may be paid according to the originally scheduled repayment terms.
No penalty interest, additional interest, excess profit, or late fees (regardless of their designation) may be imposed on late payments, except for the regular interest. This directive is issued under Section 41 of the Finance Company Act, 2023, and takes effect immediately, as stated in the circular.
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Bangladesh Bank (BB) has directed borrowers affected by recent floods to repay their loan instalments within three months after the normal repayment period to facilitate repayment adjustments.
This means that if entrepreneurs make their payments within 90 days following the last day of the loan instalment, they will not be considered defaulters.
The central bank issued a notification on Sunday, which was sent to the managing and executive directors of all commercial banks.
According to the notice, extensive flooding has recently inundated several districts across the country. As a result, affected borrowers—particularly those in the agriculture and cottage, micro, small, and medium enterprises (CMSMEs) sectors—may struggle to repay their loan instalments on time.
To alleviate the repayment burden on flood-affected borrowers, the BB has stated that installments due between August 2024 and October 2024 for existing agricultural and CMSME sector loans issued to designated flood-affected areas (as identified by the Ministry of Disaster Management and Relief on August 1, 2024) must be repaid within three months after the end of the respective loan period.
The central bank also extended the adjustment period for loans due from August to October 2024 by an additional three months. However, finance companies must independently verify that customers are genuinely affected by the floods.
The BB circular further clarifies that if a customer declines to accept these benefits, the loan instalments may be paid according to the originally scheduled repayment terms.
No penalty interest, additional interest, excess profit, or late fees (regardless of their designation) may be imposed on late payments, except for the regular interest. This directive is issued under Section 41 of the Finance Company Act, 2023, and takes effect immediately, as stated in the circular.
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