Sick non-textile firms get till June to apply for loan exit facility

The Bangladesh Bank has pushed back the deadline for sick non-textile industries to apply for an exit facility to settle their defaulted loans amounting to more than Tk50 lakh.

On Monday, the central bank in a circular stated that banks will be allowed to offer the facility until 30 June, upon receipt of a minimum down payment of 2.5% of the current outstanding loan amount.

According to a senior central bank official, such companies were asked in October last year to apply to their respective banks for the exit facility by paying the down payment within 90 days of the publication of the circular.

"The deadline expired last January but many borrowers could not make the down payment and apply. So the deadline has been extended," he told The Business Standard, on condition of anonymity. 

Besides, the circular has also given instructions regarding the imposition of cost of funds on the outstanding loan amount.

The central bank official further said that earlier there was an instruction that the maximum cost of funds could be imposed on the outstanding loan amount after waiving the interest of these industries. In that directive, there were also instructions about the relaxation of the cost of funds.

"However, as banks were in doubt about that, it has been clarified in the new guidelines. It has been said that banks can decide to reduce the cost of funds at their discretion," he added.

As per last October's instructions, the loan amount will be consolidated on an instalment basis within a maximum period of three years from the date of the exit facility. However, if there is a need for debt consolidation by selling immovable properties, banks can provide a one-time loan repayment opportunity to the customers concerned within the said three years. In both cases, if the loan is not settled within the time specified by the bank, this facility will be considered cancelled.

It is further stated that, irrespective of an instalment-based or one-time repayment schedule under the exit facility, the respective loan account shall be shown as classified till full settlement of the loan.

The bank shall settle the matter requested in the application of the customer within 45 days from the date of receipt of the application of the borrower. It was also mentioned in the circular that the board of directors of the financing bank can decide to grant an interest waiver facility in favour of these sick industries.