Can show interest of financial institution as income
Bangladesh Bank has also introduced
a discount for Non-Bank Financial Institutions (NBFIs) so that borrowers can
show their unrealistic interest income as profit if they pay only 25% of their
current payable amount.
The central bank on Sunday issued a
circular detailing how the NBFI would transfer interest against their deferred
loans for 2021.
Earlier, the central bank had issued
similar directives to banks so that they could show unrealistic interest income
as profit.
In the latest circular, NBFI has
instructed that borrowers who have paid 25% of their dues will not be
identified as defaulters.
On the other hand, borrowers who
fail to repay 25% of their dues by December of this year will be identified as
defaulters, and have been asked to report to NBFI's Credit Information Bureau
(CIB) as classified loans.
Since NBFIs are taking a high risk
to show unrealistic interest income as profit, they must maintain an additional
2% provision called “special provision” against
that defaulted loan, read the circular.
According to industry insiders, the
risk of making unrealistic income profitable is that if borrowers fail to repay
the balance, it will increase defaulted debt. An increase in defaulted debt will
increase provisioning requirements and higher provisioning requirements will
eat up profits.
The Lone Moratorium facility, which
has been running for the last two years, will end this December.
Borrowers, who will have the
opportunity to defer this loan by paying only 25% of the amount due this year,
have been asked to repay the remaining loan by 2022, the notification added.