The loan defaulters deemed ‘good borrowers’ are likely to see a safe exit as the government is going to offer a bailout for them, the finance minister hinted on Monday.
As part of the exit plan, the loan defaulters have to pay 7 per cent simple interest rate after making 2 per cent down payment of their principal loan amounts.They will get 12 years’ time to repay the rest of their principal loan amounts, AHM Mustafa Kamal told reporters after he held a meeting with the committee formed to formulate the exit plan.
A circular will be issued within the next one month after finalising the plan and it will come into effect from 1 May, he said.
Bangladesh Bank Governor Fazle Kabir, head of the committee Zaid Bakht, Finance Division Secretary Abdur Rouf Takukder and Financial Institution Division Secretary Md Asadul Islam were present, among others, at the meeting.
“There is an exit system for loan defaulters in all the countries except for ours. Now, we’re considering providing some facilities to the good borrowers,” Kamal said after the meeting.
“For availing themselves of facility, the borrowers will have to make 2 per cent down payment on their whole loan amounts and then they have to pay flat 7 per cent interest rate on their diminishing loan balance on a quarterly basis to be repaid in highest 12 years,” he added.
The minister argued that business entities have to take a huge amount of risk while taking off and in the process, some good borrowers can become loan defaulters if they face loss instead of making profit.“This segment of borrowers should get support from the state, while the bad borrowers should get penalties,” he added.
In reply to a question on how good or bad borrowers will be identified, he said their loan repayment trend will suggest their character.
Besides, a special audit will be performed to identify them, he also informed.
“If any businessman has never paid any instalment or an exporter who has not paid loan even after regularly receiving export proceed, how can they be said good borrowers,?” he commented.
Those who tried to repay their loans but failed will be treated as good borrowers, he also explained.
The immediate past Finance Minister Abul Maal Abdul Muhith first formed a committee, headed by renowned economist Dr Zaid Bakht to address various problems in the bank and financial sector.
However, the committee could not dispose of the matter as Muhith’s tenure was over.
The initiative of offering a safe exit to the defaulters was taken in consideration of good businessmen’s contribution to employment, poverty reduction and the country’s economic development, Kamal noted.
“The committee was formed after some anomalies like the continuation of charging compound interest rates on defaulted loans were found,” the finance minister said.
New borrowers, on the other hand, will get new loans on market-based simple interest rates so that they can avoid losses. “We’ll provide ample scope to service their loans.
Besides, Kamal informed that the government is forming an Asset Management Company along with framing the Insolvency Act to address the NPLs.
He added that all NPLs will be sold to this company after floating tenders to free the government from such loan burdens.