What is Loan Rescheduling and Its Process and Scenario in Bangladesh:
Loan Rescheduling is the process of making bad loans to regular loans. It is the process of extending time to pay existing loan tenure; that is extending the repayment period; and this is so happen when borrower fails or unable to pay its loan/loan installment within sanctioned/specified time or in time. Due to borrower's loan payment capacity fails, loan rescheduling process takes place. It is the rearranging of loan payment which stopped due to various reasons specially when borrower unable to pay mainly for business loss.
In Bangladesh, generally classified loans rescheduled following Bangladesh Bank's rescheduling policy and circular. Currently, a loan can be rescheduled for highly four times with 2.5% to 5% down payments of total non-performing loans (NPLs). Earlier the down payments percentage was 10% to 30%. Now, the defaulter allows repaying the loan amount over a period of six (6) years to eight (8) years which was earlier nine months to two years.
In present central bank's policy, the borrower will become defaulters once again if he/she fails to repay loan installments in six months in row. Banks generally takes various steps to regularize their NPL loans to regular loan at year-end. According to Bangladesh Bank's record Tk 63,720 crore loans rescheduled in the year of 2022 which is highest among the previous records.
Loan Rescheduling has impact on bank that due to loan rescheduled, liquidity crisis may shown as loan fund takes more time for repayment, and it reduces profitability of bank.
Published Date: 02/12/2023
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