Non-bank financial institutions (NBFIs) will no longer be allowed to reschedule any classified loans more than three times, according to a Bangladesh Bank circular.
If a borrower fails to repay a loan even after the third round of rescheduling, they will be marked as wilful defaulters, according to a new policy issued by the central bank on Tuesday.
Only the interest income against the amount of a classified loan recovered through rescheduling can be taken into account, it said.
The Bangladesh Bank said various NBFIs are repeatedly rescheduling loans without verifying customers' repayment ability.
The central bank has come up with such a policy since NBFIs are not complying with the rescheduling process properly.
From now on, NBFIs can reschedule classified loans – substandard, doubtful, and bad/loss – subject to receiving down payments of 15% for the first time, 30% for the second time, and 50% for the third time of rescheduling.
Substandard loans can be rescheduled for 48 months in the first phase, 36 months in the second phase, and 24 months in the third phase, while doubtful loans will get 36 months, 24 months, and 18 months respectively in the three rescheduling slots.
Short-term loans, no matter which category they fall in, can be rescheduled for a maximum of 12 months in the first round of rescheduling, and six months each in the second and third phases.
According to the new policy, each non-bank financial institution needs to have formulated a loan rescheduling policy approved by its board of directors, and its conditions should not be easier than that of the central bank.
The NBFIs must reschedule classified loans within a month after receiving down-payments from borrowers. However, the money deposited as an instalment should in no way be shown as a down payment.