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Loan defaulter redefined
Bangladesh Bank on Thursday redefined the default borrower saying that if any loan or part of it or accrued interest remains ‘overdue’ for more than six months, the borrower will be treated as loan defaulter.
The BB issued a circular to the managing directors and the chief executive officers of all banks saying that the directive would be implemented as per Section 5 (GaGa) of the Banking Companies Act, 1991.
A BB official told New Age on Thursday that the central bank had recently issued two master circulars on loan classification and provisioning and loan rescheduling.
After the issuance of the circulars, some communication gaps between the central bank and the banks emerged over the default loan issue and a number of stakeholders treated sub-standard loan as default loan, he said.
The sub-standard loans had been considered as default loans before the issuance of the circulars if a borrower did not pay any instalment and interest of a loan for more than six months after overdue.
According to the new master circulars, a loan will be considered as sub-standard one if a borrower does not pay any instalment or interest of the loan for more than three months after overdue, he said.
There is now no scope to treat the sub-standard loan as default loan and the BB’s Thursday’s circular has cleared the issue, the official said.
The BB circular said any continuous loan if not repaid or renewed within the fixed time limit for repayment would be treated as ‘overdue’ from the following day of the expiry date.
Any demand loan if not repaid within the fixed time limit for repayment or after the demand by the bank will be treated as ‘overdue’ from the following day of the expiry date or demand date, the circular said.
In case of any instalment(s) or part of instalment(s) of a fixed term loan is not repaid within the fixed expiry date or due date, the amount of unpaid instalment(s) as well as the loan will be treated as ‘overdue’ from the following day of the expiry date or due date.
The short-term agricultural loan or microcredit if not repaid within the fixed time limit for repayment will be considered ‘overdue’ after six months of the expiry date, the circular said
[ Business ] 2012-07-20