BB relaxes loan repayment for businesses

The Bangladesh Bank today relaxed loan repayment facility for businesses that took short-term demand loans from banks.

The borrowers with unclassified demand loans will be allowed to repay 50 per cent of their instalments payable for the April-June period of 2023.

The loans that usually carry a repayment period of three months are termed demand loans. Banks mainly give such types of loans to importers in the form of post-import financing.

The lenders sometimes finance importers when they are unable to repay their required payment in time. Under such a situation, banks repay the loans to foreign suppliers by creating loans in favour of importers.

The amount of the instalments that will not be cleared in the second quarter of 2023 will have to be paid back within the next three months (July-September).

The central bank yesterday offered the same relaxed facility to the borrowers, who took term loans, short-term farm loans and microloans disbursed by banks.

The move from the BB came after some business chambers, including the Federation of Bangladesh Chambers of Commerce and Industry and the Bangladesh Garment Manufacturers and Exporters Association, recently demanded the central bank relax the loan repayment scope, said a central banker.

The banking regulator followed relaxed loan facilities in various forms between 2020 and 2022 to help businesses overcome serious impacts brought on first by the coronavirus pandemic and then by Russia's war in Ukraine.

No relaxed facilities were in place in the first quarter this year.