Bangladesh Bank has issued new directives to facilitate the business and financial recovery of institutions affected by non-performing loans. Under the previous system, organisations seeking loan rescheduling were required to pay the full down payment upfront. The new policy relaxes this requirement, allowing the down payment to be made in two instalments. This adjustment provides borrowers with a measure of relief from the burden of a single, large upfront payment.
Details of the New Down Payment Policy
Under the revised regulations, applicants can pay the down payment in two separate instalments. The first instalment will constitute 50 per cent of the total amount, with the remaining 50 per cent payable within the next six months. In addition, institutions that have already received approval from the Policy Support Committee but were unable to implement the arrangement on time due to reasonable circumstances are granted an additional three-month extension.
The table below summarises the key changes:
| Subject | Previous Rule | New Rule | Additional Time |
|---|---|---|---|
| Down payment amount | 100% upfront at application | 50% first instalment; 50% within six months | – |
| Policy Support Committee-approved institutions | Implement within prescribed time | Prescribed time plus three months | 3 months |
| Interest waiver decisions | Based on bank-customer relationship | Same rule applies | – |
Impact on Implementation
Officials from Bangladesh Bank have indicated that many affected businesses found it challenging to pay the full down payment in one go. By allowing payment in two instalments, the new policy reduces financial pressure on borrowers. Furthermore, for banks that have yet to activate certain Policy Support Committee-approved facilities for clients, an additional three-month grace period has been granted.
Regarding interest waivers, the bank’s board retains the discretion to make decisions based on the bank-customer relationship. This flexibility is intended to further assist institutions in restructuring their operations and regaining financial stability.
Broader Implications
The new guidelines are designed to simplify the loan rescheduling process for distressed businesses and enhance overall economic stability. Experts predict that the two-part down payment and extended timelines will encourage more institutions to apply for rescheduling, thereby accelerating the loan restructuring process.
Overall, this reform offers mutual benefits for both borrowers and banks, representing a significant step toward stabilising the national economy. It is expected to incentivise greater participation in financial restructuring and ensure that rescheduled loans are managed more effectively.