Bangladesh’s top trade body yesterday urged banks to take actions against the wilful loan defaulters to bring down the amount of bad loans.

“Action should be taken against wilful defaulters while extending cooperation to unintentional defaulters,” said Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI).

He made the remark at a view-exchange meeting with the managing directors and chief executive officers of commercial banks styled “Role of the banking sector in the development and progress of the economy: challenges and opportunities” organised by the FBCCI at the Sheraton Dhaka hotel.

Business leaders and CEOs expressed their keenness to work together to move against the willful defaulters to reduce the default loans.

Non-performing loans stood at Tk 99,205 crore in June, up 11.80 per cent from six months earlier and 3.21 per cent year-on-year, data from the Bangladesh Bank showed.

Ali Reza Iftekhar, chairman of the Association of Bankers Bangladesh (ABB), a platform of CEOs of the banks, sought cooperation from the FBCCI to recover the default loans.

Obayed Ullah Al Masud, managing director of Rupali Bank, said the FBCCI could organise a meeting on the recovery of defaulted loans. “This will be very beneficial for all banks.”

Ghulam Mohammed Alomgir, chairman of Max Group, said: “Time has come to stand by those who are bad customers. Now is the time to help them become better customers.”

“If banks think of profit at this time, it will not work. Now is the time to survive, not to make a profit.”

At the discussion, businesspeople urged banks to simplify the loan process under the stimulus package to recover the losses inflicted by the coronavirus pandemic.

They called for new loans, an extension of the repayment period of loans disbursed under the stimulus packages, and a uniform interest rate.

Jashim Uddin pointed to the lower fund allocation for the cottage, micro, small and medium enterprises (CMSMEs) and a slower implementation of the packages.

India has allocated 36 per cent of the Covid-19 incentives to the CMSME sector, while it is 33 per cent in Thailand and 24 per cent in Malaysia.

Bangladesh has set aside 22 per cent of the stimulus funds to the CMSME sector.

“While the implementation of the incentive packages dedicated to the export and large sectors is satisfactory, the implementation rate in the CMSME sector is only 77 per cent.”

“In such a situation, it is crucial to disburse loans to help recover the business of cottage, small and medium entrepreneurs.”

Ali Reza Iftekhar said around 80 of the loans under the stimulus packages had been disbursed. “It would have been better if the disbursement rate were higher.”

Jashim Uddin said the Bangladesh Bank asked banks to set up dedicated desks for the SME sector and provide special facilities to women entrepreneurs.

“But, there is an allegation that many banks are not serious about them.”

He emphasised making the credit guarantee scheme of the central bank easily accessible to introduce concessional and mortgage-free loan facilities for SMEs.

The FBCCI recommended extending the tenure of term loans for the SME sector to 10 to 15 years, including a two-year moratorium period.

The payback period is a maximum of 24 months now.

Jashim Uddin urged banks to extend credit facilities to SMEs that did not have bank accounts.

Preeti Chakraborty, a director of the FBCCI, said, “We have had a very bad time in the last 18 months. Therefore, it will be better if the repayment period is extended to 10-15 years with a grace period of three years.”

Humaira Azam, managing director of Trust Bank, however, said: “You are asking for more time to repay the loan. But is it possible to ask for more time to repay the depositors?”