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Banks are in a fix over loan recovery, with big defaulters failing to repay despite rescheduling.
They said other defaulters are now also asking for their loans to be rescheduled and around 80 businesspersons with default loans have gone to court, demanding similar concessions.
Bangladesh Bank took up special provision for loan repayment of businesses in 2015 due to escalating political turmoil. At the time, 11 industrial groups rescheduled loans amounting to Taka 15 thousand crore.
According to bank sources, one year on as the time for repayment has arrived, many of the borrowers are prevaricating about repayments. They want further concessions, further loans. The Chittagong-based SA Group and Narayanganj-based BR Spinning have made no repayments at all. Ratanpur Group is seeking rescheduling facilities once again without paying the installments.
On 5 August 2014, Salman F Rahman, vice chairman of Beximco Group and private sector development advisor to the prime minister, approached Bangladesh Bank for all the loans of the group to be rescheduled. Other businesspersons came up with the same demand.
Accordingly, on 29 January 2015, the central bank came up with rescheduling regulations. Borrowers with loans exceeding Taka 500 crore would be given this concession.
According to the regulation, if the borrower failed to pay two installments, the loan would go into default in the conventional manner. The bank would be able to file a case under the 1997 Bankruptcy Act in this connection.
Bangladesh bank sources have said that around 20 companies had applied for rescheduling, but 11 groups were granted these facilities. The central bank approved the rescheduling of loans amounting to about Taka 15,218 crore. Beximco Group’s loans alone stood at around Taka 5000 crore. The other groups availing these facilities were Jamuna, Sikder, Keya, Annontex, Ratanpur, SA, BR Spinning, Rising Group and others.
Repayment of the rescheduled loans began last December. However, Chittagong’s SA Group and Narayanganj’s BR Spinning have not paid the first installment. Ratanpur Group has paid half the installment. Others are now showing no inclination of repaying the March installment.
SA, Ratanpur and BR Spinning, in an application to Bangladesh Bank, have asked for the repayment period of the rescheduled loans to be extended from 12 years to 20 years. They demand that no fresh interest be imposed and more time be given to repay the first installment on the existing loan. They also demand provision of fresh running capital. The rescheduled loans of these three groups total Taka 2315 crore.
Former governor of Bangladesh Bank Salahuddin Ahmed told Prothom Alo that the loan had been rescheduled after due consideration. Now they must be pressurized into repayment. They cannot be provided with the same concessions repeatedly. Action must be taken in accordance to the rules.
Managing director of First Securities Bank Syed Waseq Mohammed Ali told Prothom Alo, “SA Group’s loans had been rescheduled in the hope that they would repay, but the group hasn’t repaid any amount at all. There is no alternative but to take legal recourse.”
SA Group’s chairman Salahuddin Alam is also a director of Mercantile Bank. Speaking to Prothom Alo, he said the banks are not providing funds even after rescheduling. That is why most of the groups are unable to go ahead with their businesses. It is not being possible to repay the installments. “I have asked for provision fresh loan facilities. Most of the groups want this,” he said.
BR Spinning, a company of MR Group, has rescheduled Taka 572 crore in loans from four banks. Of this, Janata Bank rescheduled Taka 378 crore. It has not paid the Taka 17 crore installment which was due in December.
Janata Bank deputy managing director Mohammed Helal Uddin has told Prothom Alo that BR Spinning and SA Group have not paid anything after the rescheduling. Legal action will be taken after the deadline for repayment in March.
Managing director of Ratanpur Steel Re-rolling Mills and director of South Bangla Agriculture and Commerce Bank Maksudur Rahman has said, “The loan rescheduling policy is not realistic. We have asked for fresh rescheduling. I have repaid some amount and asked for new concessions.”
Meanwhile, 80 borrowers with loans lower than Taka 500 crore have approached the court for rescheduling provisions.
Executive director and spokesperson of Bangladesh Bank Subhankar Saha said that the rescheduling had been provided under certain regulations. Borrowers with over Taka 500 crore loans were given this concession. If they do not repay their installments, their loans will go into default. There is no scope for further concessions.
Source: Prothom Alo