No loan waiver for wilful defaulters: Bangladesh Bank

The Bangladesh Bank has barred wilful defaulters from enjoying loan waiver facility from banks.

The unscrupulous persons who take loans by forgery will not be allowed to get the support from lenders, according to a notice issued by Bangladesh Bank today.

It also specified in details as to which methods would be followed by banks to waive interest.

Before the circular, banks could waive all types of interest of borrowers irrespectively, but the latest circular has imposed embargo on waiving all sorts of interest.

Banks are not permitted to waive the principal amount of the loans under any circumstances.

The funds that have already been transferred to income segment of banks can not be waived. 

Management of respective banks will not be able to waive more than Tk 10 lakh interest amount of a loan. In such cases, management have to take prior approval from the board of directors.

Banks will have to manage their cost of fund of loans while waiving any amount of interest.

The cost of funds refers to how much banks spend in order to acquire money to lend to borrowers. 

The central bank, however, said that banks would be allowed to avoid the instruction of ensuring cost of fund in some cases.

Cost of fund will not be calculated for the projects, which have been closed for three years in a row.

If banks does not get back the default loan despite completion of all legal procedures, the formula of cost of fund can be sidestepped.

Banks usually face difficulties to return their fund if borrowers expire. 

They also face difficulties to recover their loans if borrowers face natural calamity, pandemic and river erosion. So, banks can consider the issue for relaxation of cost of fund.