Ahead of the general elections and contrary to its much-professed contractionary monetary policy, the central bank yesterday removed the bar on loan defaulters who have rescheduled their loans from getting fresh credit.
According to a circular of Bangladesh Bank (BB) issued on January 13, 2003, the borrowers who had rescheduled bank loans were not allowed to get any fresh loan within one year of the rescheduling or until full repayment of the rescheduled amounts.
Yesterday's BB circular cancelled that bar and paved the way for them to get fresh bank loans subject to a few petty conditions like repaying 7.5 to 15 percent of the rescheduled loans.
"The defaulting borrower who has availed interest waiver must settle at least 15% of the compromise amount (excluding the down payment on rescheduling as per present guideline) to avail any further credit facility from any bank," prescribed the new BB policy.
The condition is even easier for exporters. The policy reads, "Export borrower may be granted further credit facility (after being identified as not a wilful defaulter), if required," by paying back 7.5 percent of the 'compromise amount'.
About yesterday's BB circular, Centre for Policy Dialogue Executive Director Debapriya Bhattacharya said the step does not go with the present monetary policy. "It also undermines the integrity of the ongoing financial sector reforms," he observed.
The pressure of handing out new loans will mainly fall on the nationalised commercial banks (NCBs), as the numbers of loan defaulters are the highest with them, Debapriya pointed out. "It is not consistent with the current reform programme of the NCBs."
"Many would also suspect whether one of the windows of the pre-election financing is being open through this," he quipped.
If the loan defaulter is a present or former director of any bank, the new policy demands that he take a prior approval of the BB for obtaining any fresh loan.
In an instant reaction, Pubali Bank Managing Director Khandker Ibrahim Khaled told The Daily Star last night, "This new loan rescheduling policy will derange the orderliness achieved by the previous one."
"I suspect the central bank has changed the policy under pressure from the businessmen," he said, adding the policy change could be justified if repayment of at least 75 percent of the rescheduled loan was set as the condition for getting fresh loan.
"The elected governments typically remain strict during the early years of their tenure, but start to knuckle under various pressures during the fag end," Khandker noted.
