The Bangladesh Bank has scrapped its previous 10 percent rebate on interest it used to pay to good borrowers
BUILD, a public-private dialogue platform, has called for restoring the rebate facility for good borrowers who pay their loan installments on a regular basis.
The Bangladesh Bank on June 18 scrapped the previous 10 percent rebate to good borrowers on the interest or profit accrued from working capital, demand and term loans and investments.
"The central bank can revisit the new circular and continue the previously-given rebate to good borrowers to discourage a loan-defaulting culture," BUILD wrote in a press release on Sunday.
"BUILD thinks good borrowers deserve patronisation in various forms, including a rebate or incentives. The continuation of recognising and honouring good borrowers with rebate is still praiseworthy," it added.
This incentive was given until the month of September last year. However, the central bank in its June 18 circular asked banks to continue identifying good borrowers and honour them. From now on banks will identify good borrowers or investors at the end of December every year and only honour them through organising annual events.
Mentioning that the banking sector has a serious dearth of good borrowers, Build said, "The Bangladesh Bank used to encourage banks to patronise good borrowers through giving 10 percent incentives. Since the high presence of non-performing loans remains a major problem for most of the banks in the country, finding good borrowers who are regular in servicing their debt obligations needs to be a priority task for the bankers."
It further said at this stage of Covid-19, businesses are struggling for sustenance. Instead of providing good borrowers – who are trying hard to maintain the employment of their corporations – a benefit, they are withdrawing a benefit. This will discourage good borrowers. In order to recognise good borrowers, they should be provided some incentives and the rebate should be restored.