Default loan reschedule rate goes up by 9pc

Staff Correspondent

3 April, 2019 12:00 AM printer

The government has finally decided to offer default loan rescheduling facility at 9 percent interest rate, backtracking from its earlier decision of 7 percent.

“We’ve finally reached a decision to raise default loan rescheduling rate to 9 percent while the decision regarding 2 percent down payment remained unchanged,” Finance Minister AHM Mustafa Kamal said at a press conference on Tuesday.

After sitting with a special committee on the issue a few days ago, Kamal told reporters the government wants to offer a safe exit to ‘good’ loan defaulters while being tough on bad ones.

For availing the opportunity, they have to pay 2 percent down payment of principal loan amount and 7 percent simple interest for the rest following a diminishing balance sheet policy for the next 12 years, he informed.

Regarding the wishful loan defaulters, he said a special audit is underway to identify them, and asset management company will be engaged to retreat their loans alongside taking other stern legal steps.

Kamal said there will be an announcement for formation of an asset management company in the upcoming budget.

“Business will increase manifolds in the country if the decisions are put in place. We also want a vibrant private sector for greater economic development,” he commented at the press conference.

He said the government has decided to raise scheduled banks’ paid-up capital base to Tk 1,000 crore to ensure greater depositors’ security along with raising depositors’ insurance amount to Tk 2 lakh from existing one Tk1 lakh.

In a bid to expand insurance sector in the country, decision has been taken to raise the paid-up capital base for state-run insurers to Tk 5,00 crore while their authorised capital will be Tk 1,000 crore.

Repenting that the insurance coverage scenario is very poor in the country, the finance minister said from the next fiscal year they want to introduce loss of profit insurance for commercial entities and crop insurance in haor areas.

 “Usually, establishment and machinery of an industry or commercial institutions are covered by insurance but their potential loss of profit is not covered even though any commercial entity can face profit loss anytime,” the finance minister said.

He also spoke of their plans to bring risks for large infrastructure like nuclear power plant or Padma Bridge under double or re-insurance coverage to avert any loss to them.

Kamal reiterated that the new VAT law will come into effect from July with multiple rates ranging from 5 percent to 7.5 percent and also from 10 percent and 15 percent for some special items.

He said they would require Tk 80,000 crore to Tk 90,000 crore additional NBR revenue in the next fiscal year, but they want to collect more money expanding the tax net; not rates.

“I can assure you that no products will see even a one-taka price hike after the announcement of the budget,” he noted, adding that he would try to stop issuing SROs for mid-term revision in tax rates.

He also talked about necessary steps towards making the capital market vibrant in line with the country’s economic development.

NBR Chairman Mosharraf Hossain Bhuiyan was also present at the press briefing.