Regulatory Alerts2024-10-20
Added
DFIM Circular Letter No. 31: Repayment/adjustment of loans of borrowers affected by recent floods
The document mandates that for identified flood-affected areas, loans in the agriculture and SME sectors classified as non-performing as of August 1, 2024, must have their installments paid within three months after the loan's original maturity date, and the period for restructuring such loans extended by three months. This relief applies to loans disbursed between August and October 2024, provided the finance company verifies the borrower's actual flood damage; otherwise, the original repayment schedule applies. Additionally, no penalties, late fees, or extra interest are to be charged on delayed payments for these affected borrowers.
Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: DFIM Circular Letter No. 31 Managing Director / Chief Executive Officer All Finance Companies operating in Bangladesh.
Dear Sir,
Regarding the facilitation of repayment/adjustment of loans of borrowers affected by recent floods.
Recently, extensive areas of several districts in the country have been submerged due to floods. It is anticipated that due to such sudden floods, it will be difficult for affected borrowers, particularly entrepreneurs in the agriculture and SME sectors, to pay loan installments or adjust loans during their financial crisis.
- In view of the above, to facilitate the repayment/adjustment of loans of borrowers affected by floods, the Ministry of Disaster Management and Relief has issued the following instructions for non-performing loans in the SME and agriculture sectors existing in identified flood-affected areas as of August 01, 2024:
(a) Loan installments due to borrowers in the agriculture and SME sectors between August 2024 and October 2024 must be paid within 03 (three) months after the expiry of the relevant loan tenure. Furthermore, the period for adjusting loans eligible for adjustment between August 2024 and October 2024 must be extended by 03 (three) months. However, Finance Companies must ascertain on their own whether customers are genuinely affected by floods;
(b) If any customer does not agree to avail the facilities mentioned in sub-clause 02(a), loan installments/loan adjustment may be made according to the previously fixed repayment schedule; and
(c) No other type of penalty interest/extra interest/extra profit/late fee/fine (however named) shall be collected/imposed on the delayed payment amount in addition to regular interest.
- This directive is issued under the powers conferred by Section 41 of the Finance Companies Act, 2023, and shall come into force immediately.
Yours faithfully,
(Ranjit Kumar Roy) Additional Director, DFIM Phone: 9530249.
04 Prepared by Date: October 20, 2024 Institute and Market Department